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CIRCULAR  No.  35A 


Public  Service  Commission 

OF  MARYLAND 


Regulations  Prescribing  a  Uniform  System 

of    Accounts    for    Water 

Companies 


ISSUED  BY  ORDER  OF  THE  COMMISSION 


1911 


(ALT1MORE 
1911 


CIRCULAR  No.  35A 


Public  Service  Commission 

OF  MARYLAND 


Regulations  Prescribing  a  Uniform]  System 

of    Accounts    for    Water 

Companies 


ISSUED  BY  ORDER  OF  THE  COMMISSION 


June  19,  1911 


BALTIMORE 
1911 


I 


10 


INDEX 

LIST  OF  ACCOUNTS. 

SCHEDULE  A:   BALANCE  SHEET  OR  INDICANT  ACCOUNTS. 

FIXED  CAPITAL. 

Page 

1  Fixed  Capital,  June  30,  1911 

11  Organization    

12  Royalties,  Franchises  and  Licenses H 

13  Water  Collecting  System 11 

1.  Water  Diversion  Rights 1^ 

2.  Reservations    12 

3.  Impounding  Dams  and  Reservoirs 12 

4.  Lake  and  River  Cribs 12 

5.  Springs  and  Wells 1«> 

6.  Infiltration  Galleries  and  Tunnels 13 

7.  Collecting  Conduits  and  Reservoirs 13 

8.  Gravity  Intakes  and  Suction  Mains 13 

9.  Aqueducts  and  Supply  Mains 13 

14  Purification  System j  ■* 

1.  Settling    Basins I4 

2.  Coagulating   Basins If 

3.  Softening  and  Iron  Removal  Plant 15 

4.  Filters    J-jj 

5.  Ozone  Sterilizing  and  Aeration  Plant 15 

6.  Chemical  Treatment  Plant Ijj 

7.  Clear  Water  Basins Ik 

15  Pumping    Stations j? 

16  Pumping  Plant Y1 

1.  Steam    Power   Pumping    Plant 1' 

2.  Hydraulic  Power  Pumping  Plant '•  •   1 ' 

3.  Electric  Power  Pumping  Plant 18 

4.  Gas  Power  Pumping  Plant J-jj 

5.  Miscellaneous   Pumping  Plant  Equipment jj 

17  Transmission  Mains 18 

IS     Storage  Reservoirs,  Tanks  and   Standpipes L 

19  Distribution    Mains ] ; 

20  Distribution  Mains,  Extensions  and  Improvement 1J 

21  Service   Pipes 20 

22  Meters,  Meter  Boxes  and  Vaults «J{ 

23  Fire  Hydrants  and  Fire  Cisterns £i) 

24  Fountains,  Troughs  and  other  Equipment 21 

25  Stable  and  Shop  Properties 21 

26  General   Properties £j 

27  Furniture  and  Fixtures Zl 

28  Rental   Real   Properties lA 

29  Miscellaneous  Tangible  Properties ^ 

30  .Miscellaneous  Intangible    Capital ** 

FLOATING  CAPITAL. 

101  Cash    p 

102  Bills   Receivable 7^; 

103  Accounts   Receivable *<■ 

104  Other  Current  Assets *-] 

KC,     Material  and  Supplies Aq 


274647 


Page. 

106  Investments    24 

107  Sinking  Funds,  Invested 25 

108  Sinking  Funds,  Uninvested 25 

109  Special  Deposits 25 

110  Prepayments    25 

111  Unextinguished  Discount  on  Securities 26 

112  Suspense    27 

DEBT. 

200  Funded  Debt 27 

Unfunded   Debt 29 

201  Taxes    Accrued 29 

202  Interest  Accrued  on  Funded  Debt 29 

203  Interest  Accrued  on  Unfunded  Debt 29 

204  Judgments    Unpaid SO 

205  Receiver's    Certificates 30 

206  Bills  Payable j*l 

207  Customer's    Deposits 31 

208  Accounts    Payable 81 

209  Unearned    Revenue 31 

210  Dividends  Payable 32 

211  Other  Unfunded  Debt 32 

RESERVES. 

212  Sinking  Fund  Reserves 32 

213  Reserve  for  Accrued  Depreciation 32 

214  Optional    Reserves 33 

215  Premiums  on  Capital  Stock 34 

CAPITAL  STOCK. 

216A  Common    Stocks 34 

216B  Preferred   Stocks 34 


SCHEDULE  B:   INCOME  ACCOUNT. 
OPERATING  REVENUES. 

301  Metered  Rates  for  Private  Customers,  within  the  City 38 

302  Unmetered  Rates  for  Private  Customers,  within  the  City 40 

303  Metered  Rates  for  Private  Customers,  outside  the  City 40 

304  Unmetered  Rates  for  Private  Customers,  outside  the  City 40 

305  Rates  for  Municipal  and  Private  Water  Supply  Enterprises 41 

306  Revenues  for  Municipal  Water  Service 41 

311  Fees  for  Shutting  off  and  Turning  on  Water 42 

312  Plumbing   42 

313  Rents  from  Meters,  Meter  Boxes  and  Vaults 4  2 

314  Sundry    Sales 42 

315  Miscellaneous   Operating   Revenue 43 

NON-OPERATING  REVENUES. 

321  Interest   Revenue 43 

322  Rents  from  Real   Property 43 


Index 

OPERATING  EXPENSES. 

I.  Water  Supply  Expenses. 

Page. 

401  Collecting  System  Expenses 41 

402  Purification   System  Expenses 4ft 

403  Pumping  System  Expenses 45 

II.  Distribution  Expenses. 

411  Transmission    Mains 4fi 

412  Storage  Reservoirs,  Tanks  and   Standpipes 4« 

413  Distribution    Mains 4G 

414  Service  Pipes  and  Stops 47 

415  Meters,  Meter  Boxes  and  Vaults 47 

416  Fire  Hydrants  and  Fire  Cisterns 47 

417  Fountains,  Troughs  and  Other  Equipment 4S 

III.  Maintenance  Expenses. 

421     Repairs    48 

(a)  Collecting   System 48 

(b)  Purification    System 48 

( c )  Pumping   System 48 

( d )  Distribution  System 48 

(e)  General  Repairs  of  Buildings  and  Equipment 48 

IV.  GENERAL  EXPENSES. 

431  Administration    49 

432  Insurance    49 

433  Injuries  and  Damages 49 

434  Gratuitous    Work 49 

435  Stable  and  Shop  Expenses 50 

436  Miscellaneous  Operating  Expenses 50 

DEDUCTIONS  FROM   INCOME. 

437  Taxes    -^ 

438  Uncollectible    Bills 50 

439  Interest  on  Funded  Debt 50 

440  Interest  on  Unfunded  Debt 51 

441  Inventory    Adjustments 51 

442  Miscellaneous  Non-operating  Expenses 51 

APPROPRIATIONS. 

501  Extinguishment  of  Discount  on  Securities 52 

502  Depreciation  of  Plant 52 

503  Sinking    Funds 53 

504  Optional  Reserves 54 

505  Dividends   Declared 54 

506  Miscellaneous    54 

Bad  debts,  collected  or  written  off 

Expenses  Elsewhere  Unprovided  for 

Additions  to  Surplus 

Deductions  from  Surplus 


REGULATIONS  ISSUED  BY  THE  PUBLIC  SERVICE 
COMMISSION  OF  MARYLAND,  PRESCRIBING  A 
UNIFORM  SYSTEM  OF  ACCOUNTS  FOR  WATER 
COMPANIES. 


Issued  under  order  of  the  Commission  of  June  19th,  1911. 


1.  On  and  after  July  1,  1911,  every  water  company  engaged 
in  the  collecting,  selling  and  distributing  water,  and  every 
water  company  not  engaged  in  operation,  shall  keep  upon  its 
books  the  accounts  prescribed  or  defined  in  "Schedule  A"  so  far 
as  the  said  accounts  are  pertinent  to  the  facts  and  circumstances 
of  the  said  company.  The  term  water  company  is  used  herein 
in  the  sense  defined  in  the  Public  Service  Commission  Law. 

2.  On  and  after  the  date  of  service  of  this  order  on  any  such 
water  company,  such  company  shall  not  charge  to  any  account 
representing  cost  of  property  any  discount  or  commission  on 
securities  issued  by  the  said  company,  but  shall  charge  all  such 
discounts,  commissions,  and  other  expense  connected  with  the 
issue  of  securities  subsequent  to  the  said  date  of  service,  in  ac- 
cordance with  the  directions  contained  in  the  definitions  of  the 
account  named  "Organization,"  and  the  account  named  "Unex- 
tinguished Discount  on  Securities,"  in  the  said  "Schedule  A." 

3.  On  and  after  July  1,  1911,  every  such  water  company 
shall  keep  upon  its  books  the  accounts  prescribed  or  defined  in 
the  schedule  marked  "Schedule  B,"  so  far  as  the  same  are  perti- 
nent to  the  facts  and  circumstances  of  the  said  company. 

4.  During  the  year  beginning  July  1,  1911,  any  said  com- 
pany may  for  purposes  of  comparison  with  prior  years  keep  on 
its  books  any  account  pertaining  to  revenues,  revenue  deduc- 
tions, income  deductions,  and  appropriations  (as  defined  in  the 
said  "Schedule  B")  which  it  had  on  its  books  during  the  year 
beginning  July  1,  1910;  provided  that  on  or  before  June  30, 
1911,  there  be  filed  with  the  Public  Service  Commission  a  state- 
ment containing  a  list  of  the  said  accounts  pertaining  to  the 
year  begun  July  1,  1910,  and  definitions  of  such  accounts. 

5.  For  purposes  of  improving  the  efficiency  of  administra- 
tion and  operation,  any  corporation  may,  unless  or  until  other- 


wise  ordered,  keep  upon  its  books  any  temporary  or  experi- 
mental accounts  and  any  accounts  covering  particular  divisions 
of  its  operations,  but  no  change  shall  be  made  in  the  accounts 
prescribed  in  either  ''Schedule  A"  or  "Schedule  B"  or  the  sub- 
divisions thereof  without  the  assent  of  the  Public  Service  Com- 
mission being  first  obtained. 

6.  All  notices  herein  required  to  be  filed  covering  accounts 
shall  be  upon  sheets  8V2  inches  by  11  inches  in  size,  and  shall 
be  entitled  in  the  name  of  the  company  filing  said  notices,  fol- 
lowed by  a  brief  statement  of  the  character  of  the  accounts  cov- 
ered by  the  notice. 

SCHEDULE  A. 

BALANCE  SHEET  OK  INDICANT  ACCOUNTS. 

WATER  COMPANIES  DEFINED. 

Section  1  of  the  Public  Service  Commission  Law  defines  a 
Water  Company  as  follows: 

The  term  "Water  Company"  when  used  in  this  Act,  includes 
every  corporation,  company,  association,  joint  stock  company 
or  association,  partnership  and  person,  their  lessees,  trustees  or 
receivers,  appointed  by  any  Court  whatsoever,  owning,  operat- 
ing, managing  or  controlling  any  plant  or  property,  dam  or 
water  supply,  canal,  or  power  station,  distributing  or  selling  for 
distribution,  or  selling  or  supplying  for  gain  any  water. 

ACCOUNTS  TO  BE  KEPT  BY  DOUBLE-ENTRY 
METHOD. 

All  accounts  kept  by  any  corporation  or  person  within  the 
scope  of  the  present  order  shall  on  and  after  June  30,  1911,  be 

kept  by  the  double-entry  method. 

NOTE. — This  requirement  is  not  intended  to  apply  to  purely  sta- 
tistical accounts. 


CAPITAL  ACCOUNTS. 

By  Capital  as  herein  used,  is  meant  all  property  of  a  corpora- 
tion devoted  to  the  rendering  of  the  services  or  the  production 
of  the  commodities  which  are  within  the  purposes  of  the  corpo- 
ration. 

FIXED    CAPITAL. 

Fixed  Capital  is  capital  which  has  an  expectation  of  life  in 
service  of  more  than  one  year  (exception  being  made  of  hand 
and  other  small  portable  tools  liable  to  be  lost  or  stolen). 

Fixed  Capital  is  divisible  into: 

(a)  Original  Capital. 

That  put  into  service  at  the  outset  of  an  enterprise. 

(b)  Additions. 

Such  additional  structures,  facilities  or  equipment  as  do  not 
take  the  place  of  anything  previously  existing. 

(c)  Betterments. 

The  enlargement  or  improvement  of  existing  structures,  facili- 
ties and  equipment. 

(d)  Renewals. 

All  extensions  of  terms  of  years  in  land  and  tangible  fixed 
capital  and  all  extensions  of  the  life  period  of  franchises  and 
other  intangible  fixed  capital. 

(e)  Replacements. 

All  substitutions  for  capital  exhausted  or  become  inadequate 
in  service,  the  substitutes  having  practically  no  greater  capacity 
than  the  things  for  which  they  were  substituted. 

When  through  wear  and  tear  or  through  casualty  it  becomes 
necessary  to  replace  some  part  of  any  structure,  facility  or  unit 
of  equipment   and  the  extent   of  such   replacement   does  not 


6 


amount  to  a  substantial  change  of  identity  in  such  structure, 
facility  or  unit  of  equipment,  the  replacement  is  to  be  consid- 
ered a  repair  and  the  cost  of  such  repair  is  to  be  treated  as  an 
operating  expense  and  must  not  be  charged  as  a  replacement 
in  any  capital  account. 

Fixed  Capital  is  also  divided  into  landed  capital  and  non- 
landed  capital.  Landed  Capital  includes  all  interests  in  land 
(exclusive  of  improvements  thereon)  the  term  of  which  is  more 
than  one  year.  All  other  fixed  capital  is  herein  called  Non- 
Landed  Capital. 

Intangible  and  Tangible  Capital  Defined.  Non-landed  capi- 
tal is  divisible  into  intangible  and  tangible.  Intangible  Capital 
comprises  organization,  franchises,  patent  rights,  and  all  other 
intangible  property  within  the  definition  of  fixed  non-landed 
capital  as  above  stated.  Tangible  Capital  comprises  structures 
and  equipment  having  an  expectation  of  life  in  service  of  more 
than  one  year.  Because  of  their  liability  to  loss  or  theft,  hand 
and  other  small  portable  tools  are  excepted  from  tangible  capital, 
and  the  cost  of  such  tools  is  required  to  be  treated  as  a  part  of 
the  operating  expenses.  Hand  and  other  small  portable  tools 
when  first  acquired  and  before  issued  for  use  may  be  charged  to 
the  "Materials  and  Supplies"  account,  and  when  issued  charged 
to  the  appropriate  expense  account  and  the  account  "Materials 
and  Supplies"  credited  with  same. 

FLOATING  CAPITAL. 

Capital  other  than  fixed  capital  is  called  Floating  Capital. 

PLANT,  EQUIPMENT  AND  OTHER  CAPITAL  PUR- 
CHASED. 

When  any  fixed  capital  in  the  form  of  a  going  or  completed 
plant  is  purchased,  an  appraisal  of  such  capital  so  acquired  shall 
be  made,  and  the  different  constituent  elements  of  the  plant, 
equipment  or  other  capital  acquired  shall  be  appraised  at  their 
then  structural  value;  that  is  to  say,  at  the  estimated  cost  of 


replacement  or  reproduction  less  a,  proper  allowance  for  depre- 
ciation based  upon  the  length  of  time  the  plant  has  been  in 
service  and  for  such  part  of  the  plant  as  may  be  obsolete  or  inad- 
equate for  economical  use. 

If  the  actual  money  value  of  the  consideration  given  for  the 
plant  or  other  capital  was,  at  the  time  of  acquisition,  in  excess 
of  such  appraised  value,  the  excess  shall  be  charged  to  the  ac- 
count "Other  Intangible  Water  Capital"  and  the  appraised 
values  of  the  constituent  parts  shall  be  charged  to  the  appro- 
priate accounts  as  designated  in  the  following  definitions  of 
accounts  for  fixed  capital. 

If  the  actual  money  value  of  the  consideration  given  was 
not  in  excess  of  such  appraised  value,  such  money  value  shall 
be  distributed  through  the  said  accounts  in  proportion  to  the 
said  appraised  value  of  the  constituent  parts  appropriated  to 
the  respective  accounts.  Full  report  of  the  contract  of  acquisi- 
tion, the  consideration  given  therefor,  the  determination  of  the 
actual  money  value  of  such  consideration,  the  appraisal  and  the 
amounts  charged  to  the  respective  accounts  for  each  plant  or 
other  such  fixed  capital  purchased,  will  be  required  to  be  made 
to  the  Public  Service  Commission. 


COSTS  OF  NEW  CAPITAL. 

All  charges  made  to  capital  or  other  accounts  on  or  after  July 
1,  1911,  shall  be  the  actual  money  cost  of  the  things  in  respect 
of  which  they  are  made.  When  the  consideration  actually 
given  for  the  thing  in  respect  of  which  a  charge  to  a  capital 
account  is  made  is  anything  other  than  money,  the  actual  con- 
sideration shall  be  described  in  the  entry  with  sufficient  fullness 
and  particularity  to  identify  it,  and  the  amount  charged  shall  be 
the  actual  money  value  of  such  consideration  at  the  time  of  the 
transaction. 


COSTS  OF  LABOR,  MATERIALS  AND  SUPPLIES. 

Cost  of  labor  (employed  in  construction)  includes  not  only- 
wages,  salaries  and  fees  paid  employes,  but  also  such,  personal 
expenses  of  employes  as  are  borne  by  the  corporation. 

Cost  of  materials  and  supplies  consumed  in  construction  is 
the  cost  at  the  place  where  they  enter  into  construction,  includ- 
ing cost  of  transportation  and  inspection  when  specifically 
assignable. 

DISCOUNT  ON  SECURITIES 

Dicounts  upon  securities  or  commercial  paper  issued  in  pay- 
ment for  capital  are  to  be  provided  for  in  other  accounts  and 
must  in  no  case  be  charged  to  capital  accounts 

WITHDRAWALS  OR  RETIREMENTS. 

When  any  thing  is  withdrawn  or  retired  from  service,  the 
amount  at  which  such  thing  stood  charged  in  the  capital  ac- 
count shall  be  credited  to  the  capital  account  in  which  it  stood 
charged  at  the  time  of  withdrawal,  and  the  entry  of  such  credit 
shall  give  by  name  and  page  of  book  or  other  record  the  original 
entry  of  cost  of  the  thing  withdrawn.  If  there  is  no  such  origi- 
nal entry,  that  fact  shall  be  stated  in  connection  with  the  credit 
entry.  If  such  amount  is  not  known,  it  shall  be  estimated,  the 
facts  upon  which  the  estimate  is  based  shall  be  shown  and  the 
amount  thus  estimated  to  be  the  original  charge  in  respect  of 
such  thing  withdrawn  shall  be  credited. 

PARTICULARS  REQUIRED  TO  BE  SHOWN  IN 
ENTRIES. 

Every  charge  made  to  a  capital  account  on  and  after  July  1» 
1911,  shall  show  whether  the  thing  in  respect  to  which  the 
charge  is  made  is  original  capital,  or  an  addition,  a  betterment, 
a  renewal  or  a  replacement.     If  the  thing  is  a  betterment,  re- 


newal  or  replacement  the  entry  shall  designate  the  thing  en- 
larged, improved,  renewed  or  replaced  and  shall  state  by  name 
and  page  of  hook  or  other  record  of  entry  the  original  cost  of 
such  thing  enlarged,  improved,  renewed  or  replaced.  If  there 
is  no  entry  in  the  accounts  showing  the  cost  (to  the  corporation) 
of  such  thing  bettered,  renewed  or  replaced  that  fact  shall  be 
stated  in  the  entry,  and  the  cost  shall  be  estimated,  if  not  known, 
and  when  estimated  the  basis  of  such  estimate  shall  be  shown. 

If  any  betterment  involves  the  partial  destruction  or  partial 
reconstruction  of  the  thing  bettered,  only  such  portion  of  the 
cost  of  the  change  shall  be  charged  as  a  betterment  as  will  when 
added  to  the  original  cost  (estimated  if  not  known)  of  the  thing- 
bettered  give  the  cost  of  reconstruction  or  replacement  of  the 
thing  as  bettered,  and  the  remainder  of  the  cost  of  change  (ac- 
count being  taken  of  any  salvage)  shall  be  charged  to  the  ap- 
propriate repair  account. 

First  entries  to  all  capital  accounts  in  respect  of  any  particu- 
lar thing  shall  describe  it  with  such  particularity  as  to  enable 
its  identificaion  and  shall  give  it  a  distinguishing  name,  num- 
ber, or  other  designation  by  which  it  shall  thereafter  be  desig- 
nated in  every  entry  in  any  capital  account  which  in  any  way 
concerns  it. 

In  the  following  definitions  of  accounts  the  numbers  prefixed 
to  the  titles  are  inserted  solely  for  convenience  of  reference  and 
are  no  part  of  the  titles  or  definitions. 

DEFIXITIOXS  OF  FIXED  CAPITAL  ACCOUNTS. 

1—FIXED  CAPITAL  JITXE  30,  1911. 

Charge  to  this  account  all  the  Fixed  Capital  (that  is,  the  total 
cost  of  all  land,  plant,  equipment,  apparatus,  etc.,  other  than 
materials  and  supplies,  hand  and  other  small  tools)  of  the  ac- 
counting person  or  corporation  as  such  capital  stood  at  the  close 
of  Tune  30,  1911.  Such  charges  shall  be  made  at  the  figures  at 
•which  such  capital  was  carried  on  the  books  of  the  said  person 
or  corporation  on  that  date.     When  any  capital  included  in 


10 

isuch  account  is  retired  from  service,  the  amount  at  which  it  is 
charged  therein  shall  be  credited  to  this  account,  and  the  amount 
originally  charged  to  capital,  less  any  salvage  that  may  occur, 
shall  be  concurrently  charged  to  the  account  "Reserve  for  I  >epre- 
eiation"  (or  equivalent  account  carried  on  the  books  on  June  30, 
1911)  unless  there  was  carried  on  the  books  at  that  date  a  re- 
serve to  cover  retirements  of  capital  from  service,  in  which  case 
the  said  concurrent  charge  shall  be  made  to  such  retirement  ac- 
count. If  the  amount  at  which  said  capital  in  service  on  June 
30,  1911  (and  subsequently  retired  from  service)  was  included 
in  the  said  account  is  not  disclosed  on  the  books  and  records  of 
the  accounting  person  or  corporation  and  is  not  within  the 
knowledge  of  such  person  or  corporation  or  officers  or  other 
employes  thereof,  it  shall  be  estimated  and  such  estimated 
amount  shall  he  treated  as  is  above  directed  for  the  actual 
amount,  the  fact  of  estimation  being  stated  in  the  entry. 

The  following  capital  accounts  are  prescribed  for  transactions 
subsequent  to  June  30,  1911: 

11— ORGANIZATION. 

Charge  to  this  account  the  cost  of  effecting  organization  and 
such  capital  exploit  expenses  as  may  be  properly  connected 
'therewith. 

This  includes  cost  of  preparing  and  distributing  prospectuses, 
cost  of  soliciting  subscriptions  for  stock  (but  not  for  loans  nor 
for  the  purchase  of  bonds  or  other  evidences  of  indebtedness) 
cash  fees  paid  to  promoters  and  the  actual  cash  value  at  the  time 
of  organization  of  securities  paid  to  promoters  for  their  services 
in  organizing  the  enterprise,  counsel  fees,  cost  of  preparing  and 
issuing  certificates  of  stock  and  cost  of  procuring  certificates  of 
necessity  from  state  authorities  and  other  like  costs. 

This  account  shall  not  include  any  discounts  upon  stocks  or 
other  securities  issued,  nor  shall  it  include  any  cost  incident  to 
negotiating  loans  or  selling  bonds  or  other  evidences  of  indebted- 
ness. 


11 

12— ROYALTIES,  FRANCHISES  AXD  LICENSES. 

Charge  to  this  account  the  cost  of  royalties  or  licenses  paid  to 
licensors,  and  payments  to  city,  town  or  state  (exclusive  of 
taxes)  for  franchises.  If  any  such  franchise  has  a  life  of  not 
more  than  one  year  after  the  date  when  it  is  placed  in  service, 
it  shall  not  be  charged  to  this  account  but  to  the  appropriate  ac- 
counts in  "Operating  Expenses,"  and  in  "Prepayments"  if  ex- 
tending beyond  the  fiscal  year. 

Water  Supply  Collecting  System  Properties. 

In  cases  of  companies  obtaining  water  from  points  remote 
from  the  city,  the  collection  system  is  to  be  considered  as  includ- 
ing all  water  system  fixtures,  appliances  and  structures  utilized 
in  collecting  water  and  for  conveying  it  from  the  place  of  its 
collection  to  the  purification  or  pumping  system,  or  if  a  purely 
gravity  system,  then  to  a  point  in  or  out  of  the  city  at  which 
the  company  begins  to  distribute  Avater  to  customers.  In  the 
case  of  companies  obtaining  water  from  a  source  located  in  or 
near  the  city,  or  near  to  private  customers,  the  collecting  system 
is  here  considered  as  including  all  water  supply  fixtures,  appli- 
ances and  structures  connecting  the  sources  of  supply  with  the 
purification  works  or  pumping  works,  whichever  may  be  sit- 
uated nearest  the  source  of  supply.  In  both  cases  the  collecting 
system  is  here  considered  as  including  all  land  upon  which  the 
structures,  appliances  and  fixtures  mentioned  are  located,  or  the 
right  of  easement  in  such  land ;  the  cost  of  all  water  diversion 
rights  (as  distinguished  from  water  power  rights)  in  per- 
petuity or  terminable;  and  the  cost  of  all  buildings  and  other 
improvements  upon  such  land,  and  the  cost  of  all  operating 
equipment  used  in  conjunction  therewith. 

13— WATER  COLLECTING  SYSTEM. 

Charge  to  this  account  the  cost  of  all  land,  structures  and 
equipment  appurtenant  to  the  collecting  system  of  the  company, 
as  described  above. 


L2 


This  account  may,  if  the  accounting  company  desires,  be  fur- 
ther classified  under  the  following  headings,  which  shall  be  the 
titles  of  sub-accounts  set  up  hereunder : 

1.  Water  Diversion  Rights. 

This  includes  the  cost  of  all  water  diversion  rights  (as  distin- 
guished from  water  power  rights),  meaning  thereby  the  cost 
of  acquiring  from  riparian  land  owners  the  right  to  divert  for 
supply  purposes  the  waters  of  any  stream,  and  from  neighbor- 
ing land  owners  the  right  to  draw  from  ground  water  sources  of 
supply;  also  compensation  and  costs  in  connection  therewith 
paid  for  abating,  modifying  or  abandoning  causes  of  allowable 
pollution  of  streamb  and  ground  waters  used  for  supply; 
whether  such  rights  are  acquired  or  compensated  for  in  per- 
petuity or  for  a  definite  term  of  more  than  one  year. 

2.  Reservations. 

This  includes  the  cost  of  all  land  for  reservations  along 
sources  of  supply,  and  also  the  cost  of  all  completed  buildings 
erected  thereon  and  in  connection  therewith,  as  well  as  all 
equipment,  etc. 

3.  Impounding  Dcuns  and  Reservoirs. 

This  includes  the  cost  of  the  land  and  all  completed  structures 
thereon  used  for  impounding  water  for  supply  purposes  at  the 
sources  of  supply. 

•1.  Lake  and  River  Cribs. 

This  includes  the  cost  of  all  land,  including  lake  or  river  bed. 
and  all  completed  structures  thereon  used  for  collecting  waters 
for  supply  purposes. 


5.  Springs  and  Wells. 

This  includes  the  cost  of  all  land  and  all  completed  struc- 
tures thereon,  used  for  collecting  water  from  springs  and  of  the 
wells  for  obtaining  ground  waters,  including  the  curbing  or 
casing  of  wells,  but  not  including  any  equipment  for  pumping 
water  at  wells. 

6.  Infiltration  Galleries  and  Tunnels. 

This  includes  the  cost  of  the  land  and  rights  of  way,  and  all 
completed  structures  thereon  and  therein,  used  for  collecting 
waters. 

7.  Collecting  ('and  a  its  and  Reservoirs. 

This  includes  the  cost  of  the  land  and  rights  of  way,  and  all 
completed  structures  thereon  and  therein,  used  for  collecting 
waters  from  various  sources  and  storing  in  reservoirs  ready  for 
purification,  pumping  or  distributing,  or  for  conveying  to  the 
purification  or  pumping  plant,  or  the  distribution  system  (if  a 
purely  gravity  system ). 

8.  Gravity  Intakes  and  Suction  Mains. 

This  includes  the  cost  of  all  land  ami  rights  of  way  and  all 
completed  structures  thereon  and  therein,  used  for  bringing 
water,  by  gravity  or  suction,  from  the  source  of  supply  to  the 
purification  or  pumping  plant. 

'J.  Aqueducts  and  Supply  Mains. 

This  includes  the  cost  of  all  land  and  rights  of  way  and  all 
completed  structures  thereon  and  therein  used  for  bringing 
water  by  aqueducts  or  supply  mains,  from  the  source  of  supply 
to  the  purification  or  pumping  plant,  or  to  the  distribution 
system  (if  a  purely  gravity  system). 


14 

PURIFICATION  SYSTEM  PROPERTIES. 

The  purification  system  includes  all  property  and  equipment 
utilized  for  or  in  connection  with  the  purification  of  water,  in 
conveying  water  from  one  part  of  the  purification  system  to 
another,  including  steam  or  other  power  plant  and  pumping 
equipment  when  such  power  plant  and  pumping  plant  is  used 
in  connection  with  the  delivery  of  wash  water  for  filter  or  sand 
washing,  but  not  including  any  steam  or  other  power  plant  and 
pumping  equipment  which  is  used  for  pumping  the  water  sup- 
ply from  one  part  of  the  purification  works  to  another. 

14— PUEIFICATIOX  SYSTEM. 

Charge  to  this  account  the  cost  of  all  land,  structures  and 
equipment  appurtenant  to  the  purification  system  of  the  com- 
pany, as  described  above. 

This  account  may,  if  the  accounting  company  desires,  be  fur- 
ther classified  under  the  following  headings,  which  shall  be  the 
titles  of  sub-accounts  set  up  hereunder : 

1.  Settling  Basins. 

This  includes  the  cost  of  the  land  and  all  completed  structures 
thereon  for  the  sedimentation  of  water  without  coagulation 
whether  such  sedimentation  is  preliminary  to  supply  Or  as  a 
preliminary  step  in  conjunction  with  the  further  purification 
of  water  by  some  additional  process ;  also  the  valves  and  connec- 
tions with  the  succeeding  step  in  the  purification  process  or  the 
mains  or  other  means  of  conveyance  to  the  pumping  plant  or 
the  distribution  system  (if  a  purely  gravity  system). 

2.  Coagulating  Basins. 

This  includes  the  cost  of  the  land  and  all  completed  structures 
thereon  used  for  the  coagulation  of  water,  whether  such  coagula- 
tion is  preliminary  to  supply  or  as  a  step  in  conjunction  with 


15 


the  further  purification  by  sonic  additional  process,  or  whether 
used  as  a  step  in  purification  following  sedimentation;  also  the 
cost  of  equipment,  such  as  coagulant  mixing  and  storage  tanks, 
orifice  boxes  and  feeder  equipment,  valves  and  connections  with 
ihe  succeeding  step  in  the  process  or  the  mains  or  other  means 
of  conveyance  to  the  pumping  plant  or  distribution  system  (if  a 
purely  gravity  system),  appliances  for  cleaning  out  basins,  etc. 

.'!.   Softening  and  Iron  Removal  Plant. 

This  includes  the  cost  of  the  land  and  all  completed  -tmetures 
thereon  used  for  the  process  of  water  softening  and  iron  re- 
moval; also  all  equipment  and  appliances  connected  with  and 
forming  a  part  of  the  softening  or  iron  removal  plant  including 
all  connections  with  the  succeeding  step  in  the  purification  pro- 
cess or  the  mains  or  other  means  of  conveyance  to  the  pumping 
plant  or  the  distribution  system  (if  a  purely  gravity  system), 
appliances  for  cleaning  out  basins,  etc. 

4.  Filters. 

This  includes  the  cost  of  the  land  and  all  completed  structures 
thereon  used  for  filtration  purposes,  whether  such  filters  be 
''roughing  filters,"  "slow  sand  filters,"  or  "mechanical"  filters ; 
also  all  equipment  and  appliances  forming  a  part  of  such  filters, 
cleaning  and  sand  washing  equipment,  etc.,  and  all  connections 
with  the  succeeding  step  in  the  entire  purification  process  or 
the  mains  or  other  means  of  conveyance  to  the  pumping  plant 
or  the  distribution  system  (if  a  purely  gravity  system),  mechan- 
ical ami  air  agitation  equipment  together  with  the  power  plant 
therefor. 

5.  Ozone  Sterilizing  and  Aeration  Plaid. 

This  includes  the  cost  of  the  land  and  all  completed  structures 
thereon  used  for  the  process  of  water  purification  or  treatment 
by  the  ozone  sterilizing  or  aeration  process,  including  all  equip- 


10 


merit  or  appliances  connected  or  forming  a  part  of -the  plant, 
and  all  connection.-;  with  the  succeeding  step  in  the  purification 
process,  or  the  mains  or  other  means  of  conveyance  to  the  pump- 
ing plant  or  the  distribution  system  (if  a  purely  gravity  sys- 
tem J. 

G.    Chemical  Treatment  Plant. 

This  includes  the  cost  of  the  land  and  all  completed  struc- 
tures thereon  used  for  the  chemical  treatment  of  water,  whether 
such  treatment  is  preliminary  or  subsequent  to  some  further  or 
preceding  process  of  purification  or  treatment  of  water  by  some, 
additional  process  or  whether  such  chemical  treatment  is  tho 
sole  method  of  treatment  of  the  water  supply. 

Included  here  are  all  buildings,  equipment  and  appliances 
such  as  mixing  tanks  and  gravity  or  pump  feed  apparatus, 
basins,  if  any,  and  all  connections  with  the  next  step  in  the 
purification  process,  or  the  mains  or  other  means  of  conveyance 
to  the  pumping  plant  or  the  distribution  system  (if  a  purely 
gravity  system ). 

7.  Clear  Water  Basins. 

This  account  is  provided  only  for  use  of  companies  which  em- 
ploy some  system  or  method  of  purification  and  to  it  should  be 
charged  the  cost  of  the  land  and  all  completed  structures  thereon 
used  for  the  storing  of  water  either  in  process  of  purification  as 
an  intermediate  step  in  the  purification  system,  or  as  the  final 
storage  of  purified  water  ready  for  delivery  to  the  pumping 
plant  or  the  distribution  system  (if  a  purely  gravity  plant  ). 
This  account  includes  also  the  cost  of  equipment  and  appli- 
ances and  connections  from  the  (dear  water-basins  to  the  suction 
or  wet  wells  for  pumping  or  to  the  pumps  direct,  or  to  the  supply 
or  suction  main  or  other  means  of  conveyance  to  the  pumping 
plant  or  distribution  system. 


17 

Pumping  System  Properties. 

15— PUMPING  STATIONS. 

( Jharge  to  this  account  the  cost  of  all  land  and  of  all  completed 
buildings  and  fixtures  used  for  the  pumping  of  water,  including 
Outbuildings,  tool  houses,  shops,  etc.,  and  all  appurtenant  walks, 
fences,  drives,  and  all  permanently  attached  fixtures  forming 
a  part  thereof. 

16— PUMPING  PLANT. 

(  liarge  to  this  account  the  cost  of  all  plant  and  equipment 
used  for  the  pumping  of  water,  but  not  including  the  buildings 
and  other  properties  properly  chargeable  to  account  No.  15. 

This  account  may,  if  the  accounting  company  desires,  be  fur- 
ther classified  under  the  following  headings,  which  shall  be  the 
titles  of  sub-accounts  set  up  hereunder: 

1.  Steam  Power  Pumping  Plant. 

This  includes  the  cost  of  all  steam  plant  and  equipment,  and 
the  accessory  equipment  such  as  boilers  and  their  settings,  stacks 
and  their  foundations,  fuel  and  ash  handling  and  storage  equip- 
ment, super-heaters,  economizers,  damper  regulators  and  all 
piping,  etc.,  and  other  appliances. 

2.  Hydraulic  Power  Pumping  Plant. 

This  includes  the  cost  of  all  land  other  than  that  occupied 
by  the  pumping  station  and  buildings,  together  with  the  cost  of 
all  water  power  rights  (as  distinguished  from  water  supply 
diversion  rights)  and  the  cost  of  all  structures  provided  exclu- 
sively for  the  development  of  hydraulic  power  such  as  dams, 
headgates,  canals,  flumes,  relief  structures,  and  appurtenant 
power  generating  equipment  such  as  water  wheels  with  control 


18 

equipment    and    power    transmission    equipment    from    water 
wheels  to  pumps  and  also  pumps  and  pumping  equipment,  etc. 

3.  Electric  Power  Pumping  Plant: 

This  includes  the  cost  of  all  equipment  used  for  pumping 
water  by  electric  power,  whether  such  power  is  purchased  or 
generated  by  the  company  itself,  also  the  pumps  and  pumping 
equipment  and  all  appurtenant  equipment  and  appliances. 

4.  Gas  Power  Pumping  Plant. 

This  includes  the  cost  of  all  equipment  used  for  pumping 
water  by  gas  power,  whether  such  power  is  obtained  from  pur- 
chased gas,  or  from  producer  gas  plant.  Included  here  are  the 
cost  of  gas  producer  plants  and  apparatus,  gas  storage  and  trans- 
mission equipment,  gas  engines,  pumps  and  pumping  equip- 
ment, etc. 

5.  Miscellaneous  Pumping  Plant  Equipment. 

This  includes  the  cost  of  all  equipment,  apparatus  and  ap- 
pliances used  in  connection  with  the  pumping  plant  but  not 
properly  includible  in  any  of  the  preceding  sub-accounts. 

Distribution  System  Properties. 

17— TRANSMISSION"  MAINS. 

The  transmission  mains  applies  only  in  the  case  of  water 
works  operating  pumping  stations  (in  the  case  of  gravity  sys- 
tems these  mlains  would  come  under  the  designation  of  supply 
or  distribution  mains),  and  are  understood  to  be  those  mains 
which  convey  water  for  long  distances  without  having  any  con- 
nections thereto  for  service  therefrom,  from  the  pumping  sta- 
tion to  the  distributing  storage  reservoir  or  the  distributing  sys- 
tem mains. 


19 

Charge  to  this  account  the  cost  of  land  and  rights  of  way, 
and  all  main  pipes  and  special  castings,  valves  and  valve  vaults 
and  boxes,  regulating  and  other  equipment  and  appliances  and 
all  buildings  and  other  structures  used  in  connection  therewith. 

18— STORAGE  RESERVOIRS,  TANKS  AND 
STANDPIPES. 

Charge  to  this  account  the  cost  of  all  land,  reservoirs,  tanks 
and  standpipes  with  the  appurtenant  buildings,  structures  and 
equipment  connected  therewith,  used  for  the  storage  of  water 
preliminary  to  its  distribution  for  consumption. 

19— DISTRIBUTION  MAINS. 

Charge  to  this  account  the  cost  of  all  land  and  rights  of  way 
for  main  pipe  lines  and  the  cost  of  all  main  pipes  and  special 
castings  used  for  distribution  of  water  to  customers.  (Data 
as  to  the  length  of  pipe  of  each  diameter  and  the  date  of  their 
installation  should  be  carefully  kept) .  Also  the  cost  of  all  gate 
valves  in  the  distribution  mains,  together  with  the  boxes  over 
such  valves,  and  the  cost  of  installing  the  valves  and  boxes. 
Also  the  cost  of  all  special  fixtures  and  appliances  connected  to 
the  mSain  pipes  together  with  the  cost  of  installing  same,  such 
as  regulating  valves,  air  chambers,  relief  valves,  blow-off  cocks, 
flush  plugs,  etc. 

20— DISTRIBUTION  MAINS,  EXTENSIONS  AND 
IMPROVEMENT. 

This  account  is  intended  to  show  the  total  cost  of  labor  and 
material  of  all  new  mains  laid  and  the  cost  of  laying  new 
street  mains  to  replace  old  mains. 

In  case  new  mains  are  laid  charge  this  account  with  the  cost 
of  all  labor  and  material,  including  cartage,  city  permits,  trench- 
ing, paving,  etc. 


20 


In  case  of  old  mains  replaced  by  mains  of  larger  size,  charge 
this  account  and  credit  account  Xo.  19  "Distribution  Plains" 
with  the  original  cost  of  old  mains  when  laid,  less  present  value 
of  material  recovered  and  taken  into  storeroom.  If  original 
cost  cannot  be  arrived  at,  use  estimated  cost  based  upon  present 
cost  of  laying  same  size  pipe. 

In  case  of  old  main  abandoned  and  left  in  the  ground,  charge 
"Reserve  for  Accrued  Depreciation"  and  credit  account  Xo.  19 
"Distribution  Mains"  with  the  original  cost  of  the  old  main 
when  laid.  If  original  cost  cannot  be  arrived  at,  use  estimated 
cost  based  upon  present  cost  of  laying  same  size  pipe. 

NOTE. — Debits  to  this  account  and  to  "Reserve  for  Accrued  Depre- 
ciation" for  mains  abandoned  must  be  analyzed  in  the  report  to  the 
Public  Service  Commission. 

21— SEEVICE  PIPES  AND  STOPS. 

Charge  to  this  account  the  cost  of  material  and  labor  includ- 
ing all  other  costs  and  charges  incurred  in  connection  there- 
with; such  as  permit  fees,  etc.,  accruing  in  the  installation  of 
service  pipes  and  stops  from  main  pipes  to  the  customers'  prem- 
ises, when  it  is  the  policy  of  the  company  that  such  costs  shall  be 
capitalized,  and  when  costs  of  the  services  so  installed  are  not 
borne  by  the  customer,  although  the  company  may  have  full 
control  over  the  same. 

22— METERS,  METER  BOXES  AXD  VAULTS.   ■ 

Charge  to  this  account  the  cost  of  all  meters,  meter  boxes  and 
meter  vaults,  together  with  the  cost  of  their  installation  which 
are  furnished  on  customers'  service  connections  without  charge 
to  the  company. 

23— FIRE  IIYDRAXTS  AXD  FIRE  CISTERXS. 

Charge  to  this  account  the  cost  of  all  hydrants  and  fire  cis- 
terns together  with  the  cost  of  pipe,  valves,  etc.,  connecting  same 
with  distribution  main  pipes,  and  the  cost  of  installing  same. 


21 


24— FOUNTAINS,  TROUGHS  AND  OTHER 
EQUIPMENT. 

Charge  to  this  account  the  cost  of  all  fountains,  troughs,  and 
other  equipment  and  appliances  for  the  utilization  of  the  water 
supply  by  the  general  public,  together  with  the  cost  of  their 
connection  and  installation,  which  are  installed  at  the  cost  of 
and  are  owned  by  the  comlpany. 

25— STABLE  AND  SHOP  PROPERTIES. 

Charge  to  this  account  the  costs  of  land  and  buildings  used 
for  stables  and  shops,  also ; 

(a)  The  cost  of  horses  and  mules,  wagons,  harness,  etc.,  au- 
tomobiles, motorcycles  and  bicycles,  etc.,  and  all  equipment 
provided  for  hauling  materials,  etc. 

(&)  The  cost  of  all  machinery,  machine  tools,  hand  tools  of 
a  permanent  character  and  other  appliances  used  for  or  in  con- 
nection with  the  operations  of  a  general  shop,  and  also  such 
general  tools  and  appliances  as  meter  testers,  testing  pitometers, 
and  all  tools  and  appliances  having  a  life  of  more  than  one  year. 

26— GENERAL  PROPERTIES. 

Charge  to  this  account  the  cost  of  all  land  and  buildings  pro- 
vided for  general  offices,  laboratories,  store  room  yards,  etc., 
which  are  not  includible  in  any  of  the  foregoing  accounts. 

27— FURNITURE  AND  FIXTURES. 

Charge  to  this  account  the  cost  of  all  desks,  tables,  chairs, 
carpets,  cases,  movable  partitions,  railings,  shelving  type- 
writers, adding  machines,  addressographs,  and  other  office  de- 
vices, stoves,  portable  gas  and  electric  fixtures  and  other  fittings, 
etc.,  provided  for  use  in  the  offices  of  the  company. 


22 

28— RENTAL  REAL  PROPERTIES. 

Charge  to  this  account  the  cost  of  land  and  the  improvements 
thereon  which  are  held  and  utilized  solely  or  principally  for 
the  rents  to  be  obtained  therefrom,  and  which  do  not  constitute 
any  part  of  the  water  supply  or  service  properties. 

29— MISCELLANEOUS  TANGIBLE  PROPERTIES. 

Charge  to  this  account  the  cost  of  all  tangible  general  prop- 
erties, not  properly  includible  in  any  of  the  foregoing  accounts. 

30— MISCELLANEOUS  INTANGIBLE  CAPITAL. 

Charge  to  this  account  the  cost  of  all  other  property  coming 
within  the  definition  of  intangible  capital  and  devoted  to  water 
service  operations.  All  entries  of  charges  to  this  account  shall 
describe  the  acquired  property  with  sufficient  particularity 
clearly  to  identify  it,  and  shall  show  specifically  the  principal 
from  whom  acquired  and  all  agents  representing  such  principal 
in  the  transaction ;  also  the  term  of  life  of  such  property,  esti- 
mated if  not  known,  and  if  estimated,  the  facts  upon  which  the 
estimate  is  based. 

DEFINITIONS  OF  FLOATING  CAPITAL  ACCOUNTS. 

Floating  Capital  is  divided  into  two  groups,  of  which  the  first 
is  herein  called  Current  Assets  and  the  second  Materials  and 
Supplies. 

In  the  following  definitions  the  figures  prefixed  to  the  titles 
of  the  accounts  are  no  part  of  the  titles  and  are  inserted  merely 
for  convenience  of  reference : 

101— CASH. 

Charge  to  this  account  all  money  coming  into  the  possession 
of  the  corporation  and  in  which  the  corporation  has  the  bene- 


23 


ficial  interest. ,  This  includes  coin  of  the  United  States,  United 
States  treasury  notes,  gold  and  silver  certificates  and  greenbacks, 
and  bank  bills  payable  to  bearer.  Also  charge  to  it  all  bank 
credits,  checks  and  drafts  receivable,  subject  to  satisfaction  or 
transfer  upon  demand  (whether  payable  to  bearer  or  to  order). 
Credit  this  account  with  all  cash  disbursements  of  the  corpora- 
tion. 


102— BILLS  RECEIVABLE. 

Charge  to  this  account  the  cost  of  all  bills  receivable  (except 
as  below  provided)  which  are  the  property  of  the  corporation 
and  upon  which  solvent  concerns  are  liable  or  which  are  suffi- 
ciently secured  to  be  considered  good.  This  account  includes 
demand  notes,  drafts,  etc.,  issued  by  others  than  banks,  and  time 
notes,  drafts,  etc.,  by  whomever  issued.  This  account  does  not 
include  investments  (for  which  see  below)  ;  nor  does  it  include 
interest  coupons. 


103— ACCOUNTS  RECEIVABLE. 

Charge  to  this  account  all  amounts  owing  to  the  corporation 
on  open  book  accounts  against  solvent  corporations,  firms  and 
individuals.  This  includes  current  accounts  against  customers 
who  are  still  receiving  water  service,  amounts  due  from  custom- 
ers whose  service  has  been  discontinued  and  whose  accoimts  are 
in  process  of  collection  in  the  usual  way,  amounts  due  from  em- 
ployes and  agents  authorized  to  make  collections  from  customers 
and  representing  funds  that  they  have  actually  collected,  for 
which  the  customer  has  received  credit,  but  which  are  not  yet 
included  in  the  funds  carried  in  ''Cash;"  also  all  judgments 
against  solvent  concerns  where  judgment  is  not  appealable  or 
suspended  through  appeal. 


24 

i    104— OTHER  CURRENT  ASSETS. 

Charge  to  this  account  the  cost  of  all  current  assets  of  the  cor- 
poration which  are  not  includible  under  any  of  the  last  three 
foregoing  accounts.  By  current  assets  are  meant  only  those 
things  which  are  readily  convertible  into  money  and  which  are 
held  with  the  intent  of  being  presently  converted  into  money 
and  not  as  investments. 

105— MATERIALS  AND  SUPPLIES. 

Charge  to  this  account  the  cost  (including  transportation)  of 
all  materials  and  supplies  which  are  not  debited,  on  receipt, 
directly  to  the  construction  or  operating  expense  account  for 
which  they  are  purchased,  regardless  of  whether  the  same  are 
intended  to  be  consumed  in  construction  or  in  operation,  or  later 
to  be  sold. 

Where  discounts  recovered  through  prompt  payment  are  not 
credited  to  the  particular  bills,  the  cost  at  which  such  materials 
and  supplies  shall  be  charged  shall  be  the  invoice  price  and  any 
discounts  later  recovered  through  prompt  payment  for  such  bills 
and  supplies  shall  be  credited  to  this  account. 

When  any  materials  or  supplies,  the  cost  of  which  has  been 
charged  to  this  account,  are  issued  for  use,  the  cost  of  the  same 
shall  be  credited  to  "Materials  and  Supplies"  and  debited  to  the 
proper  construction  or  operating  expense  account. 

Inventories  of  materials  and  supplies  shall  be  taken  at  least 
annually,  and  any  shortage  or  overages  disclosed  by  such  in- 
ventories shall  be  credited  or  debited  to  this  account  and  debited 
or  credited  to  the  operating  expense  account  No.  431  "Inventory 
Adjustments,"  in  case  they  cannot  be  assigned  to  specific  ac- 
counts. 

10G— INVESTMENTS. 

By  Investments,  as  here  used,  are  meant  all  properties  ac- 
quired not  for  use  in  present  operations,  but  as  a  means  of  ob- 


25 


taining  or  exercising  control  over  other  corporations,  or  for  in- 
come to  be  derived  from  them,  or  for  a  rise  in  value,  or  for  de- 
votion to  future  operations  at  a  time  when  it  seems  probable 
that  they  cannot  be  so  advantageously  acquired  as  at  the  time  of 
actual  acquisition.  The  cost  of  the  corporation's  title  to  any 
property  held  as  an  investment  for  other  than  the  Sinking 
Funds  shall  be  charged  to  an  account  entitled  "Investments." 

107— SINKING  FUNDS,  INVESTED. 

To  this  account  should  be  charged  the  cost  of  live  securities 
in  the  hands  of  trustees  for  the  purpose  of  redeeming  outstand- 
ing obligations;  also  amounts  deposited  with  such  trustees  on 
account  of  mortgaged  property  sold.  This  should  not  include 
any  reacquired  securities  issued  by  the  respondent. 

108— SINKING  FUNDS,  UNINVESTED. 

To  this  account  should  be  charged  the  amount  of  cash  set 
aside  for  investment  for  the  Sinking  Funds. 

109— SPECIAL  DEPOSITS. 

By  Special  Deposits,  as  here  used,  are  meant  amounts  of 
mioaiey  and  bank  credits  in  the  hands  of  fiscal  or  other  agents 
of  the  corporation  for  the  payment  of  coupons,  dividends  or 
other  special  purposes. 

Charges  to  this  account  shall  specify  the  purpose  for  which 
the  deposit  is  made.  When  such  purposes  are  satisfied  this  ac- 
count shall  be  credited  with  the  amount  specially  deposited  to 
provide  such  satisfaction. 

110— PREPAYMENTS. 

When  prepayments  for  taxes,  insurance,  rents  and  the  like 
are  made  in  advance  of  the  actual  accrual  thereof,  the  amount 
of  the  advance  payment  shall  be  charged  to  this  account.     As 


26 

such  taxes,  etc.,  accrue  this  account  shall  be  credited  and  the  ap- 
propriate expense  or  income  account  be  charged. 

When  prepayments  are  made  for  any  other  thing  than  taxes. 
insurance  and  rents,  etc.,  such  prepayments  shall  be  charged  to 
this  account;  and  as  the  purpose  of  prepayment  is  satisfied,  pro- 
portionate amounts  shall  be  credited  monthly  to  this  account 
and  charged  to  the  appropriate  expense  or  income  account. 

NOTE. — By  the  accrual  of  taxes,  insurance,  rents,  etc.,  is  meant 
their  accumulation  when  considered  as  spread  uniformly  over  the 
period  to  which  they  apply.  Thus,  if  the  rent  fixed  by  contract  of  leas<> 
for  a  certain  property  is  $600  for  a  calendar  year,  this  accrues  at  the 
rate  of  $50  each  month,  regardless  of  the  actual  times  when  the  rent 
matures;  $50  should  thus  (if  the  rent  has  been  prepaid)  be  credited 
each  month  to  this  account  and  concurrently  charged  to  the  appropriate 
expense  account.     Similarly  in  the  case  of  other  prepayments. 

111—UNEXTINGUISHED  DISCOUNT  ON 
SECURITIES. 

When  capital  stocks,  funded  debt  securities  and  other  evi- 
dences of  indebtedness  are  disposed  of  for  a  consideration  whose 
cash  value  is  less  than  the  sum  of  the  par  value  of  the  securities 
or  other  evidences  of  indebtedness  and  of  the  interest  thereon  ac- 
crued at  the  time  the  transfer  takes  place,  the  excess  of  such 
sum  of  the  par  value  and  accrued  interest  over  the  cash  value  of 
the  consideration  received  shall  be  charged  to  this  account. 

To  this  account  shall  also  be  charged  all  expense  connected 
with  the  issue  and  sale  of  evidences  of  debt,  such  as  fees  for 
drafting  mortgages  and  trust  deeds,  fees  and  taxes  for  recording 
mortgages  and  trust  deeds,  cost  of  engraving  and  printing  bonds, 
certificates  of  indebtedness  and  other  commercial  paper  having 
a  life  of  more  than  one  year,  fees  paid  trustees  provided  for  in 
mortgages  and  trust  deeds,  fees  and  commissions  paid  under- 
writers and  brokers  for  marketing  such  evidences  of  debt  and 
other  like  expense.  At,  or  before  the  close  of  each  fiscal  period 
thereafter,  a  proportion  of  such  discount  and  expense  based 
upon  the  life  of  the  security  to  maturity  shall  be  credited  to  this 
account   and   charged  to  account  No.   501    "Extinguishment  of 


27 


Discount  on  Securities."  Such  discount  and  expense  may,  if 
desired,  be  extinguished  more  rapidly  through  charges  of  all  or 
any  part  of  it.  either  at  the  time  of  issue  or  later,  to  the  Sur- 
plus account. 


112— SUSPENSE. 

To  this  account  shall  be  made  all  debits  not  elsewhere  pro- 
vided for  and  the  final  disposition  of  which  is  uncertain.  This 
will  include  all  such  matters  as  expense  of  preliminary  sur- 
veys, plans,  investigations,  etc.,  made  for  determining  the  feasi- 
bility of  projects  under  contemplation. 

Should  any  such  project  later  be  carried  to  completion,  such 
amounts  shall  be  credited  to  this  account  and  charged  to  the 
proper  capital  or  expense  account.  Should  it  be  abandoned 
such  amounts  shall  be  charged  to  "Miscellaneous  Xon-Operating 
Expense"  account. 


DEBT  DEFIXED. 
The  word  debt,  as  here  used,  covers  all  absolute  obligations  to 


vpay  money  at  a  definite  time  or  times,  or  at  a  time  or  times 
which  are  capable  of  being  mjade  definite  by  demand  or  other 
act  of  the  creditor.  It  does  not  cover  contingent  obligations, 
fmeh  as  obligations  to  pay  rent  for  future  enjoyment  of  the 
term,  liabilities  of  indorsers  upon  paper  not  yet  defaulted,  etc. 
Debt  is  divided  into  Funded  Debt  and  Unfunded  Debt. 


200— FFXDED    DEBT. 

Funded  Debt  comprises  all  debt  which  by  the  terms 'of  its 
creation  does  not  mature  until  more  than  one  year  after  date  of 
creation. 

Funded  Debt  is  classified  as: 


28 

(a)  .Real  Estate  Mortgage  Bonds. 

Those  secured  by  a  pledge  of  real  estate  through  mortgage  or 
trust  deed,  or  equivalent  instrument  or  act.  Such  mortgage 
may  also  include  equipment,  securities  and  other  chattels. 

(b)  Collateral  Trust  Bonds. 

Those  secured  by  a  pledge  of  securities  or  other  commercial 
paper  through  trust  deed  or  equivalent  instrument  or  act,  but 
not  covering  real  estate  or  equipment. 

(c)  Equipment  Trust  Obligations. 

Those  secured  by  a  lien  upon  equipment,  such  lien  being 
created  in  connection  with  the  acquisition  of  the  equipment. 

(d)  Plain  Bonds. 

Those  not  secured  by  any  special  mortgage  or  other  lien,  but 
supported  only  by  the  general  credit  of  the  issuer. 

(e)  Debentures. 

Unsecured  certificates  of  indebtedness. 

Debentures  with  mortgage  rights  are  those  entitled,  in  ac- 
cordance with  the  terms  of  the  contract  under  which  they  are 
issued,  to  participate  in  the  benefits  of  any  subsequently  cre- 
ated mortgages.  If  debentures  run  in  perpetuity,  subject  to  an 
annual  interest  charge,  they  are  called  debenture  stock. 

(/')      Income  Bonds. 

Those  upon  which  the  obligation  to  pay  interest  is  contingent 
upon  the  income  of  the  corporation  not  required  for  the  dis- 
charge of  superior  obligations. 


(g)     Miscellaneous. 

Including  real  estate  mortgages,  pledging  specified  real  es- 
tate to  secure  payment  of  a  debt  not  evidenced  by  a  note,  bond 
or  other  negotiable  paper;  and  chattel  mortgages,  pledging 
specified  chattels  to  secure  the  payment  of  a  debt  not  evidenced 
by  a  note,  bond  or  other  negotiable  paper.  Also  promissory 
notes,  running  for  more  than  one  year  from  the  date  thereof,  not 
secured  by  mortgage  or  other  lien. 

Unfunded  Debt. 

The  accounts  for  unfunded  debt  are  defined  as  follows : 

201— TAXES  ACCRUED. 

Credit  to  this  account"  at  close  of  each  month  the  taxes  ac- 
crued during  the  month,  and  make  corresponding  charges  to 
the  "Taxes"  account.  Credits  to  the  account  ''Taxes  Accrued'' 
will  necessarily  be  based  upon  estimate  until  the  amount  of  tax 
levied  for  the  tax  period  is  known  ;  such  estimate  shall  be  based 
upon  the  best  data  available  and  as  soon  as  the  amount  of  tax 
for  the  period  is  known  the  account  shall  be  adjusted  to  con- 
form. When  any  tax  is  paid  it  shall  be  charged  to  this  account, 
and  credited  to  "Cash"  or  other  suitable  account. 

202— INTEREST  ACCRUED  OX  FUXDED  DEBT. 

Credit  to  this  account  as  it  accrues  and  becomes  payable  the 
interest  accrued  on  the  funded  debt  of  the  corporation  and 
charge  same  to  the  account  Xo.  4-3°.  "Interest  on  Funded  Debt.'* 
When  such  interest  is  paid  it  shall  bo  charged  to  this  account 
and  credited  to  "Cash"  or  other  suitable  account. 

20:)— IXTEREST   ACCRUED   OX   UXFUXDED   DEBT. 

Credit  to  this  account,  at  the  close  of  the  year,  all  accrued 
interest  on  the  unfunded  debt  of  the  corporation  and  charge 


CO 


same  to  the  account  Xo.  440  "Interest  on  Unfunded  Debt." 
This  does  not  include  any  interest  on  judgments,  nor  that  on 
receiver's  certificates.  The  interest  accruing  on  any  judgments 
against  the  corporation  or  upon  any  receiver's  certificate  shall 
be  credited  to  the  account  to  which  such  judgment  or  receiver's 
certificate  stands  credited  and  charged  to  the  account  Xo.  440 
"Interest  on  Unfunded  Debt." 


204— JUDGMENTS  UXPAI I ). 

When  any  judgment  of  indebtedness  is  rendered  by  a  Court 
of  competent  jurisdiction  against  the  corporation,  or  any  fine 
or  penalty  requiring  the  payment  of  money  is  assessed  by  such  a 
court  against  the  corporation,  and  no  appeal  accompanied  by 
stay  of  execution  has  been  taken  therefrom  within  the  time  al- 
lowed by  law  for  such  appeal,  the  amount  of  such  judgment 
shall  be  credited  to  this  account,  and  the  entry  shall  designate 
the  action  or  suit  as  a  consequence  of  which  such  judgment  is 
pronounced  or  such  tine  or  penalty  assessed.  The  designation 
of  the  action  or  suit  shall  show  the  court,  the  term  thereof,  the 
parties  and  the  character  of  the  action  or  suit.  Interest  ac- 
cruing upon  any  such  judgment  shall  be  credited  to  this  ac- 
count and  charged  to  the  account  Xo.  440,  "Interest  on  Un- 
funded Debt." 


■20r>— RECEIVER'S  CERTIFICATES. 

When  any  receiver  acting  under  the  orders  of  a  competent 
Court  is  in  possession  of  the  property  of  the  corporation  and 
under  the  orders  of  such  court  issues  certificates  of  indebted- 
ness chargeable  upon  such  property,  the  par  value  of  such  cer- 
tificates shall  be  credited  to  this  account.  Interest  accruing 
upon  such  certificates  shall  also  be  credited  to  this  account  and 
charged  to  the  account  Xo.  440,  "Interest  on  Unfunded  Debt." 


31 

200— BILLS  PAYABLE. 

When  any  note,  draft  or  other  bill  payable  which  matures  not 
later  than  one  year  after  date  of  issue,  or  of  demand,  or  as- 
sumption by  the  corporation  of  primary  liability  thereon,  is  is- 
sued or  assumed,  the  par  value  thereof  shall  be  credited  to  this 
account  and  when  it  is  paid  it  shall  be  charged  to  this  account 
and  credited  to  ''Cash"  or  other  suitable  account. 

207— CUSTOMERS'  DEPOSITS. 

Credit  to  this  account,  as  such  deposits  are  made,  all  cash 
deposited  with  the  corporation  as  security  for  the  payment  of 
water  bills.  Deposits  refunded  shall  be  charged  to  this  account 
and  credited  to  "Cash."  Deposits  applicable  to  uncollectible 
or  worthless  water  bills  shall,  at  the  close  of  the  fiscal  year  (or 
earlier,  at  the  option  of  the  accounting  corporation)  be  credited 
to  the  account  of  the  customer  involved  and  debited  to  this  ac- 
count. 

208— ACCOUNTS  PAYABLE. 

Credit  to  this  account  when  incurred  all  liabilities  of  the 
corporation  upon  open  accounts,  except  those  provided  for  in 
the  foregoing  account  "Customers'  Deposits."  This  shall  in- 
clude at  the  close  of  the  fiscal  year  all  unpaid  bills  for  appa- 
ratus, materials  and  supplies,  not  previously  credited,  and  also 
all  salaries  and  wages  due  and  unpaid. 

209— UNEARNED  REVENUE. 

This  account  should  represent  revenue  that  has  been  charged 
and  billed  to  customers,  but  is  not  earned  at  the  close  of  the 
fiscal  year.  When  customers  have  been  charged  and  billed  in 
advance  for  service  and  the  amount  of  such  bills  has  been  cred- 
ited to  a  revenue  account  and  charged  to  "Accounts  Receivable" 
an  adjustment  should  be  made,  at  the  close  of  the  fiscal  year. 


32 

"Unearned  Revenue"  should  be  credited  and  correction  entries 
made  in  the  "Accounts  Receivable"  and  in  the  revenue  account 
to  which  such  bills  have  been  credited. 

2io— DIVIDENDS  PAYABLE. 

When  any  dividend  is  declared  it  shall  be  credited  to  this 
account  and  here  remain  until  it  is  paid,  when  it  shall  be 
charged  to  this  account  and  credited  to  "Cash"  or  other  suitable 
account. 

2ii— OTHER  UNFUNDED  DEBT. 

Credit  to  this  account  at  face  value  all  unfunded  debt  upon 
which  the  corporation  is  liable  and  which  is  not  elsewhere  pro- 
vided for. 

RESERVES. 

Reserves  shall  be  classified  as  Contractual  and  Optional. 
Contractual  Reserves  are  reserves  necessitated  by  contracts  of 
the  corporation  as  e.  g.  reserves  to  cover  sinking  funds  provided 
for  in  mortgages.  Optional  Reserves  are  such  temporary  re- 
serves as  are  created  solely  within  the  discretion  of  the  corpora- 
tion. 

212— SINKING  FUND  RESERVES. 

Credit  to  this  account  all  appropriations  and  accumulations 
made  in  accordance  with  the  contract  provisions  provided  for  in 
mortgages,  etc.,  or  which  shall  be  required  by  action  of  the  cor- 
poration. 

213— RESERVE  FOR  ACCRUED  DEPRECIATION. 

Credit  to  this  account  such  amounts  as  are  charged  from  time 
to  time  to  "Depreciation"  or  other  accounts  to  cover  deprecia- 


33 


tion  of  plant  and  equipment.  When  any  capital  is  retired  from 
service  the  original  money  cost  thereof  (estimated  if  not  known, 
and  when  estimated,  that  fact  and  the  fact  upon  which  the  esti- 
mate is  based  shall  be  stated  in  the  entry),  less  salvage  shall 
be  charged  to  this  account ;  the  amount  originally  en- 
tered or  contained  in  the  charges  to  any  capital  account  in  re- 
spect of  such  capital  so  going  out  of  service  shall  be  credited  to 
such  a  capital  account,  and  any  necessary  adjusting  entry  made 
to  the  appropriate  sub-account  under  the  account  "Corporate 
Surplus  or  Deficit." 


214— OPTIONAL    RESERVES. 

When  any  admitted  liability  arises  because  of  loss  or  damage 
)to  the  property  of  others,  or  of  injuries  to  employes  or  other 
persons,  the  amount  of  the  liability  may  (if  not  previously  pro- 
vided for  by  insurance  or  self -insurance)  be  charged  to  the  ap- 
propriate expense  or  other  accounts  and  credited  to  this  account, 
against  which  (in  such  case)  the  actual  cost  of  satisfaction  of 
the  liability  shall  be  charged  when  the  matter  is  determined. 
If  the  extent  of  the  liability  cannot  be  ascertained  promptly 
after  the  liability  arises,  it  may  be  estimated  as  accurately  as 
practicable  for  the  purpose  of  determining  the  immediate  charge 
to  the  expense  or  other  appropriate  account,  in  which  case  the 
matter  shall  be  adjusted  when  the  extent  of  the  liability  is  defi- 
nitely ascertained.  If  the  loss  is  of  such  character  that  it  is  in 
whole  or  in  part  indemnifiable  under  any  contract  of  insurance 
carried  by  the  corporation,  the  indemnifiable  portion  of  the  loss 
shall  be  charged  to  the  insurer  and  credited  to  "Optional  Re- 
serve." 

When  any  amount  is  set  aside  for  any  special  reserve  not  pro- 
vided for  heretofore,  a  sub-account  shall  be  made  for  each 
particular  reserve  and  its  title  shall  designate  the  purpose  of 
such  reserve,  and  the  first  entry  therein  shall  express  in  full 
such  purpose. 


34 

215— PREMIUMS  ON  CAPITAL  STOCK. 

When  any  capital  stocks  are  disposed  of  for  a  consideration 
whose  cash  value  is  greater  than  the  sum  of  the  par  value  of 
such  stocks,  the  excess  of  the  cash  value  of  such  consideration 
over  the  sum  of  the  par  value  of  the  stocks  shall  be  credited  to 
this  account.  At  the  close  of  each  fiscal  year  a  proportion  of 
such  premium  based  upon  the  life  of  the  stock  shall  be  charged 
to  this  account  and  credited  in  the  "Revenue"  account;  or  at  the 
option  of  the  corporation  such  premium  may  be  extinguished 
more  rapidly  through  credits  of  all  or  any  part  thereof,  either 
at  the  time  of  issue  or  later,  to  the  "Corporate  Surplus  or  Def- 
icit" account. 

216— CAPITAL  STOCK 

By  stocks  of  a  corporation  are  meant  those  securities  which 
represent  permanent  interests  in  the  corporation  or  interests 
which,  if  terminal,  are  so  only  at  the  option  of  the  corporation. 

Stocks  are  classified  as  common  stocks  and  preferred  stocks. 

A.     216— COMMON  STOCKS. 

Common  stocks  are  those  whose  claimis  in  the  distribution  of 
dividends  are  subordinate  to  the  claims  of  all  other  stocks. 

R     216— PREFERRED   STOCKS. 

Preferred  stocks  are  those  which  have  the  first  claim  upon 
such  dividends  as  may  be  distributed.  They  may  be  cumu- 
lative or  non-cumulative,  participating  or  non-participating. 

If  cumulative,  the  amount  by  which  the  dividend,  at  any 
dividend  period  fails  to  reach  the  stipulated  rate,  is  carried  for- 
ward to  continue  as  a  claim  upon  dividends  until  satisfied;  if 
non-cumulative,  such  amount  lapses. 

If  a  preferred  stock  is  'participating,  it  is  not  limited  to  the 
stipulated  rate  in  the  amount  of  dividends  which  it  may  re- 


35 


ceive,  but  is  entitled  to  participate,  in  accordance  with  the  terms 
of  the  contract  under  which  it  is  issued,  in  further  dividends ; 
if  non-participating,  it  is  limited  to  the  stipulated  rate. 

A  separate  account  shall  be  kept  for  each  class  of  stocks  is- 
sued, and  no  two  stocks  shall  be  considered  of  the  same  class  un- 
less they  are  equal  in  their  interest  or  dividend  rights,  their 
voting  rights  and  the  conditions  under  which  they  may  be  re- 
tired. The  characteristics  of  any  class  of  stocks  in  these  re- 
gards shall  be  designated  in  the  title  of  the  account  raised  to 
cover  such  stocks  and  shall  be  clearly  expressed  in  the  first  entry 
in  such  account. 

If  such  issue  is  for  money,  that  fact  shall  be  stated ;  and  if 
for  any  other  consideration  than  money,  the  person  to  whom 
issued  shall  be  designated  and  the  consideration  for  which  is- 
sued shall  be  described  with  sufficient  particularity  to  identify 
it.  If  the  fair  cash  value  of  the  consideration  realized  upon  the 
issue  of  any  amount  of  stock  is  greater  than  the  par  value  of 
such  stock,  the  excess  shall  be  credited  to*  the  account  No.  215, 
"Premiums  on  Capital  Stock." 


SCHEDULE    B. 
INCOME  AND  INDICANT  ACCOUNTS   COMPARED. 

A  comparison  of  the  balances  in  the  foregoing  accounts 
(Schedule  A)  at  any  time  will,  if  the  accounts  have  been  prop- 
erly kept,  show  the  then  existing  condition  of  a  corporation's 
affairs  so  far  as  such  condition  can  be  shown  through  accounts. 
The  group  of  accounts  just  defined  is  sometimes  called  the 
Balance  Sheet  or  Indicant  accounts.  Their  balances  indicate 
the  condition  of  the  corporation  at  any  particular  time.  These 
accounts  with  their  subsidiary  accounts  are  all  that  is  necessary 
prior  to  the  time  when  the  corporation  becomes  what  may  be 
called  a  "going  concern." 

When  a  corporation  begins  operations  it  requires  an  addi- 
tional group  of  accounts  in  which  to  classify  in  convenient  form 


36 


the  accounting'  history  of  its  operations.  Such  a  group  of  ac- 
counts brings  together,  or  accumulates,  the  account  of  the 
various  incidents  of  the  corporation's  operations.  This  group 
of  accounts  may  be  called  the  Income  account.  They  are  made 
up  usually  on  a  yearly  basis  and  are  closed  into  one  grand  ac- 
count called  "Corporate  Surplus  or  Deficit,"  which  ties  together 
this  group  of  accounts  and  the  preceding  group  (Schedule  A). 

INCOME    ACCOUNT. 

Divisions  of  Income  Account. 

The  principal  divisions  of  this  group  of  accounts  are  the 
Revenue  accounts,  the  Operating  Expense  accounts,  the  Income 
Deduction  accounts  and  the  Appropriation  accounts. 

REVENUES    DEFINED. 

By  Revenues,  are  meant  all  accounts  of  money  which  the  cor- 
poration receives  or  becomes  lawfully  entitled  to  receive  for 
services  rendered,  for  products  sold,  as  gross  profits  on  mei> 
chandise  sold,  or  as  a  return  upon  its  property,  or  interests  in 
property.     Revenues  are  classified  as: 

(301-315)     Operating  Revenues. 

Those  derived  from  the  sale  of  products  and  merchandise, 
from  services  rendered  and  from  returns  on  property  used  by 
the  person  or  corporation  in  its  own  operations. 

(321-322)     Non-Operating  Revenues. 

Those  derived  as  a  return  upon  property  of  the  corporation 
in  the  hands  of  others,  or  from  its  interests  in  property  in  the 
hands  of  others.  They  may  be  sub-classified  as  Rents.  Interest, 
Dividends  and  Miscellaneous. 


37 
REVENUE  DEDUCTIONS  DEFINED, 

Revenue  Deductions  include: 

(401-430)      Operating  Expenses. 

Those  necessary  to  the  production  of  the  commodities  sold, 
the  services  rendered  and  the  collection  of  the  revenues. 

INCOME  DEDUCTIONS  DEFINED. 

Income  Deductions  include: 

(437)  Taxes. 

(438)  Uncollectible  Bills. 

(439)  Interest  on  Funded  Debt. 

(440)  Interest  on  Unfunded  Debt. 

(441)  Inventory  Adjustments. 

(442)  Miscellaneous  Non-Operating  Expenses. 

APPROPRIATIONS    DEFINED. 

Appropriations  include : 

(  501)      Extinguishment  of  Discount  on  Securities. 

(502)  Depreciation  of  Plant. 

(503)  Sinking  Fund  Payments. 

(504)  Optional  Reserves. 

(  505  )      Dividends  Declared. 
(506)      Miscellaneous. 

OPERATING  REVENUES. 

The  general  and  divisional  accounts  hereunder,  are  arranged 
for  recording  and  summing  up  the  amounts  of  revenue  that 
accrue  directly  from  or  are  incident  to  the  water  supply  sendee,, 
of  the  enterprise.  Any  revenues  other  than  those  arising  from 
water  supply  service,  are  to  be  treated  as  "Miscellaneous  Reve- 
nues,"  account  No.  .      Included  hereunder  are  revenues 


38 


both  those  collectible  for  or  for  which  compensation  is  received, 
(and  those  which  are  for  water  supply  service  furnished  gra- 
tuitously). 

In  preparing  estimates  required  for  entries  where  revenue 
bills  are  rendered  and  collected  only  at  the  close  of  fixed  periods 
and  one  of  those  periods  extends  into  two  fiscal  years  or  other 
fiscal  periods,  assume  that  the  revenue  of  the  whole  billing- 
period  of  which  the  closing  months  of  the  year  or  other  period 
are  a  part  will  be  such  percentage  above  or  below  the  revenues 
realized  for  the  same  period  one  year  before  as  previous  expe- 
rience justifies  and  credit  the  appropriate  account  hereunder 
with  such  portion  of  the  estimated  revenue  for  the  whole  period 
as  the  elapsing  months  constitute  of  that  period.  At  the  expi- 
ration of  the  period  when  bills  are  rendered,  there  should  be 
entered  the  net  difference  between  the  ascertained  amount  and 
the  aggregate  of  estimated  portions  thereof  previously  recorded. 

When  service  is  furnished  free  to  churches,  charities,  schools, 
etc.,  credit  the  appropriate  account  hereunder  with  the  value  of 
such  free  service,  and  debit  account  !No.  434,  "Costs  of  Gratui- 
tous Work."  When  water  is  furnished  free  to  municipalities, 
credit  the  appropriation  account  hereunder  with  the  value  of 
the  service  rendered  and  debit  account  No.  434,  "Costs  of  Gra- 
tuitous Work." 

When  amounts  of  cash  collected  on  erroneous  bills  are  later 
refunded  in  the  same  fiscal  year,  cash  should  be  credited,  and 
the  appropriate  account  hereunder  debited  with  the  amount  of 
the  error. 

If  the  refund  is  made  in  the  succeeding  year,  the  amount  of 
the  error  should  be  debited  to  "Corporate  Surplus  or  Deficit." 

The  balance  of  accounts  hereunder,  at  the  close  of  the  fiscal 
year  or  period  are  to  be  closed  into  "Income  Account," 

301— METERED  EATES  FOR  PRIVATE  CUSTOMERS 
WITHIN  THE  CITY. 

Credit  this  account  with  the  amounts  of  water  bills  for  private 
customers  within  the  city  furnished  on  meter  service. 


39 

This  account  may,  if  desired,  be  further  classified  under  the 
following  headings,  which  shall  be  the  titles  of  the  sub-accounts, 
set  up  hereunder. 

In  entering  the  revenue  credit's  in  these  accounts,  observe  the 
following  general  instructions : 

(a)  Metered  Residence  Rates,  within  the  City;  rates  levied 
upon  private  dwellings  for  household  purposes  and  for  barns  and 
lawns  in  connection  therewith. 

(b)  Metered  Commercial  Rates,  within  the  City  ;  rates  levied 
upon  houses  designated  as  apartment  houses,  tenement  houses, 
or  referred  to  under  other  names,  and  whether  the  water  is 
charged  to  separate  families  or  included  in  one  bill,  provided 
such  houses  do  not  use  the  water  for  operating  elevators  and  for 
other  kindred  purposes.  Also  all  revenues  for  water  furnished 
hotels,  saloons,  stores,  warehouses,  stables,  and  barns  not  for  the 
private  use  of  one  family,  etc.,  subject  to  the  limitations  con- 
cerning the  mechanical  use  of  water  for  elevators  and  kindred 
purposes. 

(c)  Metered  Industrial  Rates,  within  the  City;  rates  levied 
for  water  supply  on  metered  service  to  railroads,  factories  and 
other  establishments  using  water  for  boilers,  mechanical  or  man- 
ufacturing purposes  or  for  the  use  of  employees  in  such  factories 
and  other  establishments,  and  also  all  water  furnished  jointly  to 
houses,  stores,  factories  and  to  all  houses  and  hotels  and  other 
establishments  using  water  for  operating  elevators  and  kindred 
purposes  other  than  those  mentioned  in  the  next  sentence,  etc. 

(d)  Metered  Rates  for -Churches,  Private  Schools  and  Chari- 
ties, within  the  City :  Rates  levied  for  water  supply,  on  metered 
service,  to  churches,  private  schools  and  charitable  institutions. 
When  water  is  furnished  to  a  church  and  a  parsonage,  and  no 
separation  of  the  service  is  made  in  the  bill  the  whole  should  be 
credited  to  this  account. 

The  value  of  water  for  hospitals,  schools,  etc.,  under  the  con- 
trol of  the  city  should  be  recorded  in  the  account  No.  306, 
''Revenues  for  Municipal  Water  Service." 


40 


302— UNMETERED  RATES  FOE  PRIVATE  CUSTOM- 
ERS WITHIN  THE  CITY. 

Credit  this  account  with  the  amounts  of  water  bills  for  private 
customers  within  the  city,  furnished  without  meter,  observing 
for  such  bills  the  general  instructions  given  for  metered  water 
rates  under  account  .No.  301. 

This  account  may,  if  desired,  be  further  classified  under  the 
following  headings,  which  shall  be  the  titles  of  the  sub-accounts 
set  up  hereunder: 

(a)  Unmetered  Residence  Rates,  within  the  City. 

(b)  Unmetered   Commercial  Rates,  within  the  City. 

(c)  Unmetered  Industrial  Eates,  within  the  City. 

(d)  Unmetered  Eates  for  Churches,  Schools  and  Charities, 
within  the  City. 

303— METERED  EATES  FOE  PRIVATE  CUSTOMERS 
OUTSIDE  THE  CITY. 

Credit  this  account  with  the  amount  of  water  bills  for  private 
customers  outside  the  city,  furnished  on  metered  service,  ob- 
serving for  such  bills  the  general  instructions  given  for  water 
rates  under  account  Xo.  301. 

This  account  may,  if  desired,  be  further  classified  under  the 
following  headings,  which  shall  be  the  titles  of  the  sub-accounts 
set  up  hereunder: 

(a)  Metered  Residence  Eates,  outside  the  City. 

(b)  Metered   Commercial  Eates,  outside  the  City. 

(c)  Metered  Industrial  Eates,  outside  the  City. 

(d)  Metered  Eates  for  Churches,  Schools  and  Charities,  out- 
side the  City. 

301— UNMETERED  RATES  FOR  PRIVATE  CUSTOM- 
ERS OUTSIDE  THE  CITY. 

Credit  this  account  with  the  amount  of  water  bills  for  private 
customers  outside  the  city,  furnished  without  meter,  observing 


II 


tier  account  No.  301. 

This  account  may,  if  desired,  be  further  classified  under  the 
following  headings,  which  shall  be  the  titles  of  the  sub-accounts 
set  up  hereunder: 

(a)  Unmetered  Residence  Rates,  outside  the  City. 

(b)  Unmetered  Commercial  Kates,  outside  the  City. 

(c)  Unmetered  Industrial  Rates,  outside  the  City. 

(d)  Unmetered  Rates  for  Churches,  Schools  and  Charities, 
outside  the  City. 

305— RATES  FOR  MUNICIPAL  AND  PRIVATE 
WATER  SUPPLY  ENTERPRISES. 

Credit  this  account  with  the  amount  of  revenues  accruing  to 
the  corporation  during  the  fiscal  year  for  water  furnished  other 
water  supply  enterprises,  whether  operated  by  the  municipality 
or  by  private  corporations  or  individuals. 

306— REVENUES  FOR  MUNICIPAL  WATER 
SERVICE. 

Credit  this  account  with  the  amount  of  rates  received  for 
water  furnished  the  municipality.  Also  credit  this  account 
with  the  value  of  water  furnished  free  to  the  municipality  and 
concurrently  charge  same  amount  to  account  No.  434,  "Costs 
of  Gratuitous  Work." 

This  account  may,  if  desired,  be  further  classified  under  the 
following  headings,  which  shall  be  the  titles  of  the  sub-account? 
set  up  hereunder: 

(a)  Rates  for  Fire  Departments. 

(b)  Rates  for   Sewer  Flushing. 

(c)  Rates  for  Street  Sprinkling  and  Washing. 

(d)  Rates  for   Public  Schools  and  Charities. 

(e)  Rates  for  Other  Public  Buildings. 

(/)    Rates  for  Public  Parks,  Fountains  and  Troughs. 
{<])   Rates  for  Miscellaneous  Municipal  Water  Service. 


4-2 

MISCELLANEOUS  REVENUES. 

311— FEES  FOR  SHUTTIXG-OFF  AND  TURNING-ON 
WATER. 

Credit  this  account  with  all  fees  received  for  shutting-off  and 
turning-on  water. 

312— PLUMBING. 

Credit  this  account  with  the  charges  made  or  bills  rendered 
for  plumibing  work  either  for  the  municipality,  private  custom- 
ers or  corporations,  including  the  value  of  materials  furnished, 
such  as  meters,  meter  boxes  and  vaults,  service  pipes,  repairs  of 
service  pipes  and  meters  owned  by  and  chargeable  to  customers, 
etc.  Charge  to  this  account  the  wages  of  employes  engaged  in 
the  work,  their  personal  expenses  and  the  cost  of  meters  and  all 
materials  and  supplies  consumed  in  the  work. 

313— REXTS  FROM  METERS,  METER  BOXES  AXD 
METER  VAULTS. 

Credit  this  account  with  all  revenues  accruing  from  the  use, 
by  private  parties  and  municipalities,  of  the  appliances  named 
in  the  title  of  this  account  which  are  owned  by  the  corporation 
and  for  the  use  of  which  a  rental  charge  is  made. 

Charge  to  this  account  the  expenses  of  maintaining  and  re- 
pairing, including  testing  of  meters,  meter  boxes  and  meter 
vaults  which  are  owned  by  the  corporation  and  are  rented  to 
customers. 

314— SUXTDRY  SALES. 

Credit  to  this  account  the  amount  received  or  charged  and 
billed  for  the  sale  of  sundry  objects  incidental  to  the  operations 
of  the  corporation,  not"  elsewhere  provided  for. 


315— MISCELLANEOUS  OPERATING  REVENUE. 

Credit  to  this  account  all  revenue  accruing  fco  the  corporation 
from  the  following  sources: 

(a)  Sundry  Services.  All  receipts  from  sundry  services 
rendered  incidental  to  the  operation  of  the  company,  not  pro- 
vided for  elsewhere. 

(b)  Permits.  All  amounts  received  from  or  charged  and 
billed  to  plumbers  and  customers  for  permits  issued  for  making 
connections  with  the  water  supply  system.  The  expenses  inci- 
dent to  such  permits  should  be  charged  to  this  account. 

(c)  Interest  and  Penalties  on  Delinquent  Payments.  All 
interest  charges  and  penalties  accruing  on  delinquent  bills. 

(d)  Also  any  operating  revenue  not  heretofore  provided  for. 

NON-OPERATING  REVENUES. 

321— INTEREST  REVENUE. 

Credit  this  account,  as  it  accrues  with  all  interest  from  its  in- 
terest-bearing investments  as  are  liabilities  of  solvent  concerns 
and  individuals;  all  dividends  declared  by  solvent  concerns 
upon  stocks  held  by  the  corporation,  all  interest  accruing  on 
bank  balances  and  other  current 


322— RENTS  FROM  REAL  PROPERTY. 

Credit  this  account  with  all  amounts  accruing  as  rents  re- 
ceivable from  real  estate.  Also  the  amounts  accruing  from  the 
sale  of  forest  products  and  the  right  to  cut  such  products  from 
the  land  belonging  to  the  corporation  about  impounding  dams 
and  reservoirs;  also  revenues  obtained  from!  cutting  ice  from 
impounding  dams  and  reservoirs  and  from  any  other  similar 
sources,  such  as  fishing,  etc.  Charge  this  account  with  the  ex- 
penses accruing  on  properties  rented  to  and  in  possession  of 
other  persons  or  corporations. 


44 

OPERATING  EXPEXSES. 

The  accounts  for  operating  expenses,  or  what  may  be  Termed 
"water  service  expenses,"  are  arranged  in  four  groups  or  divi- 
sions :  Water  Supply  Expenses,  Distribution  Expenses,  Mainte- 
nance and  General  Expenses. 

I.  Water  Supply  Expenses  are  those  which  represent  the 
costs  of  service,  materials  utilized  or  consumed  in  operations  of 
the  collecting,  purifying  and  pumping  systems  of  the  corpora- 
tion. 

II.  Distribution  Expenses  are  those  which  represent  the  costs 
of  operations  of  the  distribution  system. 

III.  Maintenance  Expenses  are  those  which  represent  the 
costs  of  labor,  materials,  supplies,  etc.,  consumed  in  keeping 
the  plant  in  efficient  serviceable  condition. 

IV.  General  Expenses  are  those  which  represent  the  costs  of 
repairs,  administration  and  such  other  matters  as  are  not  in- 
cludible in  the  first  two  groups  of  accounts. 

I.     WATER  SUPPLY  EXPEXSES. 

401— COLLECTING  SYSTEM  EXPEXSES. 

Charge  to  this  account  the  operating  costs  or  expenses  of  or 
connected  directly  with  the  several  parts  of  the  entire  water  sup- 
ply system  which  are  included  in  the  account  Xo.  13,  "Fixed 
Capital."  This  includes  all  wages  and  expenses  for  inspecting 
and  policing,  care-takers  and  other  employes,  but  does  not 
include  repairs. 

This  account  may,  if  desired,  1m?  further  classified  under  the 
following  headings,  which  shall  be  the  titles  of  sub-accounts  set 
up  hereunder : 

(a)   Reservation  and  Drainage  Area. 

(  b  )    Impounding  Dams  and  Reservoirs. 

(c)  Lake  and  River  Cribs. 

(d)  Springs  and  Wells. 

(c)   Infiltration  Galleries  and  Tunnels. 


45 


('/")   Collecting  Conduits  and  Reservoirs. 
(  g  )   Gravity  Intakes  and  Suction  Mains. 
(]()    Aqueducts  and  Supply  .Mains. 

402— PURIFICATION  SYSTEM  EXPENSES. 

Charge  to  this  account  all  expenses  or  costs  incident  to  the 
purification  of  water.  These  expenses  include  the  wages  of  men 
employed  at  the  purification  works,  their  personal  and  incidental 
expenses,  the  expenses  of  running  the  works,  including  the  cost 
of  chemicals  and  supplies,  labor  for  cleaning  Lasins  and  works, 
removing  ice,  scraping  and  cleaning  purification  apparatus, 
heating,  lighting,  etc. 

Any  rents  paid  for  use  of  land,  buildings,  equipment,  etc., 
together  with  repairs  of  rented  buildings,  used  in  connection 
with  the  purification  works  should  he  charged  to  this  account. 

The  cost  of  repairs  to  the  purification  plant  owned  by  the 
corporation,  account  No.  14,  "Fixed  Capital,"  should  not  be 
charged  to  this  account. 

This  account  may,  if  desired,  he  further  classified  under  the 
following  headings,  which  shall  he  the  titles  of  sub-accounts  set 
up  hereunder: 

(a)  Sedimentation  and  Coagulation. 

(b)  Softening  and  Iron  Removal. 

(c)  Filtration. 

(d)  Chemical  Treatment. 

(e)  Clear  Water  Basins. 

403— PUMPING  SYSTEM  EXPENSES. 

Charge  to  this  account  the  expenses  of  pumping  water  and  of 
running  the  plant,  included  in  account  No.  15,  "Fixed  Capital.  ' 
These  expenses  include  the  salaries  and  wages,  personal  expenses 
of  pump  station  employes,  fuel,  water  power,  electric  power, 
electric  lighting,  gas  for  power  and  lighting,  janitor  service,  rent 
and  repairs  of  railed  property,  oil,  waste,  supplies,  etc. 


46 


The  cost  of  repairs  to  the  plant  owned  by  the  corporation, 
six m Id  not  be  charged  to  this  account. 

This  account  may,  if  desired,  be  further  classified  under  the 
following  headings,  which  shall  be  the  titles  of  sub-accounts  set 
up  hereunder : 

(  a  )    Steam  Power  Pumping'  Expenses. 

{!))   Hydraulic  Pumping  Expenses. 

(c)  Electric  Pumping-  Expenses. 

(d)  Gas  Pumping  Expenses. 

(e)  Miscellaneous  Pumping  Plant  Expenses. 

II.     DISTRIBUTION  EXPEXSES. 

411— TRANSMISSION  MAINS. 

Charge  to  this  account  the  wages  and  expenses  of  inspecting, 
guarding  and  caring  for  the  transmission  mains  of  the  system. 

412— STORAGE  RESERVOIRS,  TAXES  AND  STAND- 
PIPES. 

Charge  to  this  account  the  expenses  of  inspection,  guarding, 
and  caring  for  the  storage  reservoirs,  tanks  and  standpipes  of  the 
system,  including  labor  employed  in  keeping  the  grounds  about 
same,  the  chemical  treatment  of  stored  water  for  algae  growth, 
etc. 

The  cost  of  repairs  to  the  plant,  account  No.  ]S,  ''Fixed  Cap- 
ital," should  not  he  charged  to  this  account. 

\ 

413—1  )ISTRIBUTION  MAINS. 

Charge  to  this  account  the  expenses  of  inspecting,  caring  for 
and  testing  the  distribution  mains  of  the  system,  including  the 
valves,  valve  boxes,  and  other  fixtures  and  appliances  and  equip- 
menl   connected  thereto. 

The  cost  of  repairs  to  the  plant,  account  Xo.  1!),  "Fixed  Capi- 
tal," should  not  be  charged  to  this  account. 


47 
414— SERVICE  PIPES  AXI)  STOPS. 

('harp'  to  this  account  the  expenses  of  inspecting  service  pipes 
and  stops  which  are  owned  by  the  corporation. 

Expenses  arising  from  service  pipes  and  stops  owned  by  the 
customer  should  be  charged  to  account  Xo.  312,  "Plumbing." 

Also  charge  to  this  account  the  cost  of  material  and  labor, 
including  all  other  costs  and  charges  incurred  in  connection 
therewith,  such  as  permit  fees,  repaying  charges,  etc.,  consumed 
in  the  installation  of  service  pipes  and  stops  from  main  pipes  to 
the  customers'  premises,  when  such  costs  are  borne  by  the  corpo- 
ration and  the  services  so  installed  are  owned  by  the  corporation, 
unless  it  is  the  policy  of  the  corporation  to  capitalize  sncli  costs 
and  include  same  in  account  X<>.  21,  "Fixed  Capital." 

415— METERS.  METEE  BOXES  AXI)  METER  VAULTS, 

Charge  to  this  account  the  expense  of  inspecting',  testing  ami 
other  expenses,  but  not  repairs,  of  and  relating  to  meters,  meter 
boxes  and  meter  vaults  which  are  owned  by  the  corporation  and 
are  furnished  for  use  of  customers  free  of  rent  or  other  charge 
for  the  use  thereof.  Similar  expenses  relative  to  meters  owned 
by  customers,  if  compensated  for  should  he  charged  to  account 
Xo.  <°>1:2,  "Plumbing-,"  or  if  assumed  by  the  corporation  gratui- 
tously, they  should  be  charged  to  account  Xo.  434,  "Costs  of 
Gratuitous  Work." 


410— FIRE   IIYDRAXTS   AXI)   FIRE    CISTERXS. 

Charge  to  this  account  the  expenses  of  inspecting,  testing. 
flushing,  etc.,  of  the  fire  hydrants  and  fire  cisterns  of  the  system, 
including  therein  ail  attention  to  the  connection  thereto  from 
the  distribution  mains,  the  attention  to  and  repacking  of 
valves,  etc. 


4S 


417— FOUNTAINS,  TROUGHS  AND  OTHER 
EQUIPMENT. 

Charge  to  this  account  the  expenses  of  labor,  materials  and 
supplies  for  inspecting,  testing,  caring  for,  etc.,  all  the  plant  in- 
cluded in  account  No.  24,  "Fixed  Capital." 


Ill— MAINTENANCE  EXPENSES. 
421— REPAIRS. 

Charge  to  this  account  the  cost  of  repairing  the  various  prop- 
erties owned  by  the  corporation.  These  costs  should  be  care- 
fully distinguished  from  costs  of  running  the  various  branches 
of  the  system,  on  the  one  side,  and  from  the  costs  of  replace- 
ments, renewals,  betterments  and  additions  on  the  other.  The 
costs  first  mentioned  give  rise  to  no  physical  changes  in  the 
properties  of  the  corporation.  Repairs,  replacements,  renew- 
als, betterments  and  additions,  on  the  other  hand  give  rise  to 
such  changes.  In  recording  the  two  classes  of  costs  mentioned, 
observe  the  distinction  as  to  the  significance  of  these  terms. 

It  may  be  noted  in  this  connection  that  the  substitution  of  a 
new  engine,  boiler,  pumping  engine  or  other  apparatus,  for  an 
old  one,  is  to  be  treated  as  a  replacement  or  a  betterment ;  while 
the  substitution  of  only  a  portion  of  such  equipment — as  a 
plunger  for  a  pump  or  a  grate  bar  for  a  boiler— is  a  repair. 

This  account  may,  if  desired,  be  further  classified  under  the 
following  headings,  which  shall  be  the  titles  of  snb-accounts  set 
up  hereunder : 

(a  )    Collecting  System  Repairs. 

(h)   Purification  System  Repairs. 

(c)  Pumping  System  Repairs. 

(d)  Distribution  System  Repairs. 

(c)  General  Repairs  (of  buildings  and  equipment  not  in- 
cludible in  either  of  the  foregoing  accounts). 


49 

IV— GENERAL  EXPENSES. 

431— ADMINISTRATION 

Charge  to  this  account  all  salaries  of  general  officers,  and 
clerks,  stenographers  and  other  employes  whose  duties  relate  to 
the  general  business  of  the  corporation  and  are  not  provided  for 
elsewhere ;  all  costs  of  office  supplies,  stationery,  printing,  post- 
age, etc.,  telephone  and  telegraph  service ;  all  legal  expenses  ex- 
cept such  as  are  provided  for  in  account  No.  433,  "Injuries  and 
Damages ;"  all  expenses  incurred  in  connection  with  the  conduct 
of  a  relief  department,  including  pensions  allowed  retired  em- 
ployes ;  and  also  any  miscellaneous  expenses  connected  with  the 
administration  of  the  corporation  not  elsewhere  provided  for. 

432— INSURANCE. 

Charge  to  this  account  premiums  paid  to  insurance  companies 
for  fire,  fidelity,  boiler,  casualty,  burglar,  and  all  other  insur- 
ance ;  also  amounts  set  aside,  as  an  insurance  reserve. 

433— INJURIES  AND  DAMAGES. 

Charge  to  this  account  all  expenses  on  account  of  persons  killed 
or  injured  and  property  damaged  in  connection  with  the  opera- 
tion of  the  plant  and  system  of  the  corporation,  including  all 
law  expenses  in  connection  with  the  defense  or  settlement  of 
damage  claims. 

434— GRATUITOUS  WORK. 

Charge  to  this  account  the  value  of  all  water  service  and  the 
costs  of  work,  materials  and  supplies,  furnished  free  of  charge 
to  municipalities  or  private  customers.  Included  in  this  ac- 
count should  be  only  such  costs  as  the  corporation  would  have 
a  clear  right  to  make  charge  for,  but  which  the  policy  of  the 
company  fixes  as  free  service. 


50 
435— STABLE  AND  SHOP  EXPENSES. 

Charge  to  this  account  the  expenses  which  accrue  from  opera- 
tion and  maintenance  of  stable  and  teams,  including  wages, 
rent,  feed,  harness  repairs,  shoeing,  team  repairs,  etc.,  and  hire 
of  teams  if  not  owned. 

Also  wages  of  shop  employes,  and  materials  and  supplies  con- 
sumed by  the  shop,  rent  of  shop  buildings,  repairs  to  same,  if 
rented,  etc. 

NOTE. — This  account  can  be  distributed  to  the  appropriate  operating 
accounts  monthly,  or  at  close  of  year,  if  desired. 

436— MISCELLANEOUS  OPERATING  EXPENSES. 

Charge  to  this  account  such  other  expenses  as  are  not  properly 
includible  elsewhere  and  are  of  such  unimportant  character  as 
not  to  warrant  the  opening  of  separate  accounts  therefor. 

DEDUCTIONS  FROM  INCOME. 

437— TAXES. 

Charge  to  this  account  all  taxes  paid ;  this  includes  taxes  on 
real  estate,  personal  property,  capital  stock,  gross  earnings, 
franchises,  etc. 

438— UNCOLLECTIBLE  BILLS. 

When,  after  a  reasonably  diligent  effort  to  collect,  any 
amount  stated  for  water  or  other  service  has  proved  impracti- 
cable of  collection,  it  shall  be  charged  to  this  account  and  cred- 
ited to  the  account  receivable  in  which  theretofore  charged. 

439— INTEREST  ON  FUNDED  DEBT. 

Charge  to  this  account  all  interest  accrued  absolutely  on  the 
outstanding   funded   debt   of  the  corporation.     This  includes 


51 


mortgage  bonds,  income  bonds  (if  interest  on  such  be  payable), 
debentures  and  mortgages  and  ground  rents. 


440— INTEREST  ON  UNFUNDED  DEBT. 

Charge  to  this  account  all  interest  paid  or  accrued  on  promis- 
sory notes  or  other  unfunded  debt  of  the  corporation. 


441— INVENTORY  ADJUSTMENTS. 

Charge  or  credit  to  this  account  any  shortages  or  overages 
shown  by  the  inventory  of  Materials  and  Supplies  which  can 
not  be  distributed  to  the  proper  construction  or  operating  ex- 
pense account. 

442— MISCELLANEOUS  NON-OPERATING 

EXPENSES. 

Charge  to  this  account  all  non-operating  expense  not  pro- 
vided for  in  anv  of  the  foregoing  accounts. 


APPROPRIATIONS. 

The  balance  resulting  from  closing  the  foregoing  expense 
accounts  for  any  fiscal  period  into  Revenue  accounts  for  that 
period  gives  the  Net  Corporate  Income  for  that  period.  The 
Net  Corporate  Income  should  be  closed  into  the  "Corporate 
Surplus  or  Deficit"  account.  The  group  of  accounts  which 
show  for  any  fiscal  period  the  changes  in  the  "Corporate  Sur- 
plus or  Deficit"  account  are  designated  the  "Appropriation"  ac- 
counts, for  the  reason  that  substantially  all  of  them  are  subject 
only  to  the  discretion  of  the  corporation.  At  the  end  of  each 
fiscal  period  each  of  the  "Appropriation"  accounts  shall  be 
closed  into  the  "Corporate  Surplus  or  Deficit"  account. 


52 


501— EXTINGUISHMENT  OF  DISCOUNT  ON 
SECURITIES. 

Charge  to  this  account,  at  the  close  of  each  year,  the  propor- 
tion of  the  unextinguished  discount  on  securities  applicable 
to  the  period.  This  proportion  shall  be  such  an  amount  as  will 
completely  wipe  out  the  discount  on  the  debt  during  the  interval 
between  issue  and  maturity  of  the  same. 

The  corporation  may,  if  it  so  desire,  earlier  wipe  out  such 
discount  by  charging  all  or  any  portion  thereof  to  "Corporate 
Surplus  or  Deficit." 


502— DEPRECIATION  OE  PLANT. 

At  the  close  of  each  year  after  July  1,  1911,  the  amounts 
charged  to  the  various  repair  (or  Maintenance)  accounts  dur- 
ing the  year  shall  be  compared  with  the  amount  estimated  to 
be  necessary  to  cover  such  wear  and  tear  and  obsolescence  and 
inadequacy  as  have  accrued  during  the  year  in  the  tangible 
capital  of  the  corporation,  such  portion  of  the  life  of  the  in- 
tangible fixed  capital  as  has  expired  or  been  consumed  during 
the  year,  and  the  amount  estimated  to  be  necessary  to  provide 
a  reserve  to  cover  the  cost  of  property  destroyed  by  extraor- 
dinary casualties.  If  the  estimated  deterioration  exceeds  the 
total  repairs,  the  account  "Depreciation  of  Plant"  shall  be 
debited  and  the  reserve  account  No.  213,  "Reserve  for  Accrued 
Depreciation"  credited  with  an  amount  equal  to  the  excess;  if 
the  sum  of  the  repairs  exceeds  the  estimated  deterioration,  the 
account  "Reserve  for  Accrued  Depreciation"  shall  be  debited 
and  "Depreciation  of  Plant"  credited  with  an  amount  equal  to 
the  excess.  The  net  amount  charged  (or  credited)  to  this  ac- 
count for  any  year,  and  concurrently  credited  (or  charged)  to 
the  reserve  account  "Reserve  for  Accrued  Depreciation"  must 
be  sufficient  to  provide  in  that  account  in  respect  of  the  several 
items  of  plant,  by  the  time  such  items  go  out  of  service,  a  re- 
serve equal  to  the  original  cost  thereof,  less  salvage. 


53 


When  any  capital  is  retired  from  service,  the  amount  (esti- 
mated if  not  known)  originally  charged  to  a  capital  account  in 
respect  thereof  shall  be  credited  to  such  capital  account,  and  the 
original  cost  of  such  capital,  less  salvage,  if  any,  shall  be  charged 
to  the  account  "Reserve  for  Accrued  Depreciation,"  any  neces- 
sary adjusting  entry  being  made  in  the  proper  account  under 
"Corporate  Surplus  or  Deficit."  Where  capital  is  substantially 
continuous  and  cannot  be  satisfactorily  individualized,  it  shall 
be  kept  in  efficient  operating  condition  through  repair,  and  the 
renewals  and  replacements  of  parts  thereof  shall  be  considered 
repairs.  In  the  case  of  buildings  and  other  separate  structures 
capable  of  being  readily  individualized,  charges  To  this  account 
must  be  sufficient  to  provide  in  the  account  "Reserve  for  Ac- 
crued Depreciation"  a  reserve  equal  to  the  original  cost  thereof, 
less  salvage,  by  the  time  such  structures  go  out  of  service. 

NOTE. — Until  otherwise  ordered,  the  "amount  estimated  to  he 
necessary  to  cover  such  wear  and  tear  and  obsolescence  and  inadequacy 
as  have  accrued  during''  any  year  shall  be  based  on  a  rule  determined 
by  the  accounting  corporation. 

Such  rule  may  be  derived  from  a  consideration  of  the  said  corpora- 
tion's history  and  experience  during  the  preceding  five  years.  Depre- 
ciation of  intangible  capital  shall  likewise  be  based  on  rule.  What- 
ever may  be  its  basis,  such  rules  and  a  sworn  statement  of  the  facts 
and  expert  opinions  and  estimates  upon  which  they  are  based  shall 
be  filed  with  the  Public  Service  Commission  on  or  before  January  1, 
1912;  each  amendment  of  any  such  rule  and  a  sworn  statement  of  the 
facts  and  expert  opinions  and  estimates  upon  which  such  amendment 
is  based  shall  be  filed  with  the  Public  Service  Commission  before  it  is 
used  by  the  accounting  corporation,  and  shall  show  the  date  when  it  is 
to  be  effective.  Such  rules  and  statements  shall  be  filed  upon  sheets 
8V2  by  11  inches  in  size,  and  shall  be  entitled  "Rule  of  the  (here 
naming  the  accounting  corporation)  concerning  'Reserve  for  Accrued 
Depreciation.'  " 

503— SINKING  FUNDS. 

Charge  to  this  account  and  credit  "Sinking  Fund  Reserve" 
the  amount  of  all  accruals  required  to  be  made  to  Sinking  funds 
in  accordance  with  the  provisions  of  mortgages  or  other  con- 
tracts requiring  the  establishment  of  Sinking  funds. 


54 

504— OPTIONAL  RESERVES. 

When  any  special  reserve  is  created  by  the  corporation, 
charge  the  amount  set  aside  to  this  account  and  credit  the  spe- 
cial reserve,  giving  the  account  such  title  as  shall  clearly  desig- 
nate the  purpose  for  which  the  reserve  is  created. 

505— DIVIDENDS  DECLARED. 

Immediately  upon  the  declaration  of  a  dividend  this  account 
should  be  charged  the  amount  of  such  dividend  and  credit  made 
to  the  account  "Dividends  Payable." 

506— MISCELLANEOUS. 

Bad  Debts. 

When  any  debt  theretofore  written  off  is  collected,  the  amount 
of  the  collection,  less  expense  involved  in  such  collection,  shall 
be  credited  to  the  "Corporate  Surplus  or  Deficit"  account. 
Charge  to  the  "Corporate  Surplus  or  Deficit"  account  any  debts 
written  off  from  the  accounts  of  the  corporation  which  are 
placed  in  the  "Bad  Debt"  class. 

NOTE. — Such  "uncollectible  bills"  as  have  been  provided  for  in  the 
heretofore  denned  "Uncollectible  Bills"  account  must  not  be  included 
in  this  account. 

Expenses  Elsewliere  Unprovided  For. 

Charge  to  the  "Corporate  Surplus  or  Deficit"  account  all  ex- 
penses not  chargeable  as  a  part  of  operating  expenses  or  of  non- 
operating  expenses,  such  as  fines  levied  on  the  corporation  for 
violation  of  law,  for  misfeasance,  for  non-feasance,  etc.,  fines 
levied  on  directors,  officers  and  other  employes  and  assumed  by 
the  corporation,  donations  to  funds,  to  churches,  and  other  asso- 
ciations, and  other  like  expenses  and  out-goes. 


55 

Other  Additions  to  Surplus. 

Credit  to  the  "Corporation  Surplus  or  Deficit"  account  all 
additions  to  surplus  because  of  erroneous  accounting  in  prior 
fiscal  periods,  and  all  other  additions  to  surplus  not  elsewhere 
provided  for. 

Other  Deductions  from  Surplus. 

Charge  to  the  "Corporate  Surplus  or  Deficit"  account  all  de- 
ductions from  surplus  because  of  erroneous  accounting  in  prior 
fiscal  years,  and  all  other  deductions  from  surplus  not  elsewhere 
provided  for. 

NOTE. — A  complete  analysis  of  the  "Miscellaneous  Appropriations" 
will  be  required  in  the  annual  reports  of  Corporations  to  the  Public 
Service  Commission. 


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